the economic value of the adult social care sector - wales...the economic value of the adult social...

The Economic Value of the Adult Social Care sector - Wales Final report

05 June 2018

Final report

The Economic Value of the Adult Social Care sector - Wales

Final report i

The Economic Value of the Adult Social Care sector - Wales Final report

A report submitted by ICF Consulting Limited

Date: 05 June 2018

Job Number 30301592

James Kearney

ICF Consulting Limited

Watling House

33 Cannon Street

London

EC4M 5SB

T +44 (0)20 3096 4800

F +44 (0)20 3368 6960

www.icf.com


Final report i

Document Control

Document Title The Economic Value of the Adult Social Care sector - Wales

Job No. 30301592

Prepared by James Kearney; Andy White

Checked by James Medhurst

Date 05 June 2018

This report is the copyright of Skills for Care and Development and has been prepared by

ICF Consulting Ltd under contract to Skills for Care and Development. The contents of this

report may not be reproduced in whole or in part, nor passed to any other organisation or

person without the specific prior written permission of Skills for Care and Development.

ICF has used reasonable skill and care in checking the accuracy and completeness of

information supplied by the client or third parties in the course of this project under which the

report was produced. ICF is however unable to warrant either the accuracy or completeness

of such information supplied by the client or third parties, nor that it is fit for any purpose. ICF

does not accept responsibility for any legal, commercial or other consequences that may

arise directly or indirectly as a result of the use by ICF of inaccurate or incomplete

information supplied by the client or third parties in the course of this project or its inclusion in

this project or its inclusion in this report.


Final report ii

Contents

Abbreviations ............................................................................................................................ v

Executive summary ................................................................................................................ vii

Sector characteristics ............................................................................................................. viii Direct economic value of the adult social care sector ............................................................ viii Indirect and induced economic value of the adult social care sector ....................................... x Key indicators .......................................................................................................................... xi

1 Introduction ................................................................................................................ 1

1.1 Research aims ........................................................................................................... 1 1.2 Purpose of this report ................................................................................................ 1 1.3 Structure of this report ............................................................................................... 2

2 Sector characteristics ................................................................................................ 3

2.1 Number of service providers ...................................................................................... 3 2.2 Number of jobs .......................................................................................................... 6 2.3 Summary ................................................................................................................... 8

3 Income approach ..................................................................................................... 10

3.1 Earnings - regulated and public sector .................................................................... 10 3.2 Earnings - non-regulated sector .............................................................................. 11 3.3 Gross Operating Surplus ......................................................................................... 12 3.4 Direct employers ...................................................................................................... 14 3.5 Estimated GVA ........................................................................................................ 14

4 Expenditure approach ............................................................................................. 16

4.1 Public sector funding and co-funding ...................................................................... 16 4.2 Self-funding ............................................................................................................. 17 4.3 Estimated GVA ........................................................................................................ 18

5 Output approach ...................................................................................................... 20

5.1 Output from the residential care .............................................................................. 20 5.2 Output from non-residential adult social care .......................................................... 22 5.3 Estimated GVA ........................................................................................................ 23

6 Indirect and induced effects ..................................................................................... 25

6.1 Introduction .............................................................................................................. 25 6.2 Indirect Effects ......................................................................................................... 25 6.3 Induced Effects ........................................................................................................ 27 6.4 The total economic contribution of adult social care sector in Wales ...................... 28

7 Conclusion ............................................................................................................... 30

7.1 Summary of findings ................................................................................................ 30 7.2 Benchmarking .......................................................................................................... 31 7.3 National comparisons .............................................................................................. 33

Part A: ANNEXES ............................................................................................................... 36

Annex 1 Methodology ............................................................................................................ 37

Annex 2 Sensitivity analysis .................................................................................................. 46

Annex 3 Bibliography ............................................................................................................. 51


Final report iii


Final report v

Abbreviations Acronyms and definitions

Acronym Full title

ABS Annual Business Survey

APS Annual Population Survey

ASHE Annual Survey of Hours and Earnings

CH Companies House

CIW Care Inspectorate Wales

CQC Care Quality Commission

EBITDAR Earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs

EBITDA Earnings before interest, taxes, depreciation, amortization

FTE Full-Time Equivalent (37 hours a week)

GVA Gross Value Added

IDBR Inter-Departmental Business Register

I-O Tables Input-Output tables

LFS Labour Force Survey

NMDS-SC National Minimum Dataset - Social Care

ONS Office for National Statistics

PA Personal Assistant

PAYE Pay As You Earn

PSSRU Personal Social Services Research Unit

SCWDP Social Care Workforce and Development Programme

SfC Skills for Care

SfCD Skills for Care and Development

SIC Standard Industrial Classification

Definitions of key terms

Key term Definition

Agency An organisation which provides temporary workers to service providers

Community Care Social care services that take place out in the community and not in a fixed location

Day Care Care provided for service users in a day care centre (non-residential) or the provision of activities outside the home

Direct Payment Recipient

An individual who receives payment from the Government or local authority to pay for their own care, rather than having prescribed care provided to them

Direct jobs / employment All jobs or employment in the adult social care sector

Domiciliary care Care provided in a service users own or family home

GVA The measure of the value of goods and services produced by an economy. It is output minus intermediate consumption


Final report vi

Key term Definition

Independent Private and voluntary sector providers of adult social care

Indirect jobs / employment

All jobs or employment resulting from the purchase of intermediate goods and services by the adult social care sector

Induced jobs / employment

All jobs or employment resulting from purchases made by those directly and indirectly employed in the adult social care sector

Non-regulated Employers in the adult social care sector which are not subject to inspections or regulation

Nursing Care Care provided in a residential setting which requires nursing care

Private Employers in the adult social care sector owned by for profit private enterprises

Public Employers in the adult social care sector owned and operated by the Government local authorities and the NHS

Regulated Employers in the adult social care sector which are inspected and regulated by the national social care inspectors

Residential care Care provided in a residential setting rather than in a service users own or family home

Service User An individual who uses adult social care services

Voluntary Providers in the adult social care sector run by for not-for-profit organisations


Final report vii

Executive summary Key Findings

Sector characteristics

■ An estimated 2,070 sites were involved in providing adult social care in Wales in 2016. Most of these sites were provided nursing care. A further 1,700 individuals receive direct payments and employ Personal Assistants (PAs);

■ There were an estimated 79,800 jobs in the adult social care sector in Wales in 2016. Most of these jobs were involved in providing residential care. There were a further 3,600 jobs due to individuals employing PAs, meaning there were a total of 83,400 jobs in the adult social care sector in 2016;

■ There were an estimated 60,000 Full-Time Equivalents (FTEs) in the adult social care sector in Wales, and a further 1,600 FTEs employed as PAs;

■ Most of the adult social care workforce providing regulated services were employed at sites run by private sector providers (44,500);

■ The level of employment in the adult social care sector represents 6% of total employment in Wales; and

■ The average earnings in the adult social care sector in Wales was estimated to be £16,900.

Economic value of the sector (using the income approach)

■ It was estimated that in 2016, adult social care sector GVA was £1.2 billion. Most of this was estimated to be in residential care (£328 million, 28%);

■ This represents 1.9% of total GVA in Wales;

■ It was estimated that the average level of productivity (GVA generated per FTE) in the adult social care sector was £18,700; and

■ The estimated GVA in the adult social care sector in Wales is estimated to be higher than the Agriculture, forestry and fishing, Arts, entertainment and recreation and Water supply; sewerage and waste management sectors.

Indirect and induced value of the sector (using the income approach)

■ The indirect effect of the adult social care sector (resulting from the purchase of intermediate goods and services by the adult social care sector in delivering its services) was estimated to contribute a further 31,200 jobs (23,000 FTEs) and £554 million of GVA to the Welsh economy;

■ The induced effect of the adult social care sector (resulting from purchases made by those directly and indirectly employed in the adult social care sector) was estimated to contribute a further 12,200 jobs (9,000 FTEs) and £543 million of GVA to the Welsh economy; and

■ The total direct, indirect and induced value of the adult social care sector in Wales was estimated to be 126,800 jobs (93,600 FTEs) and £2.2 billion in 2016.

Introduction

Skills for Care and Development (SfCD) required robust estimates of the economic value of

the adult social care sector in each of the four nations of the UK. This included:

■ The annual Gross Value Added (GVA) generated directly by the adult social care sector

(including public sector activities within the sector as well as the independent sector)

(direct impact);

■ The supply chain multiplier for the adult social care sector (indirect impact); and

■ The wage multiplier for the adult social care sector (induced impact).


Final report viii

This report provides estimates for these research aims for Wales. It also provides estimates

of employment due to the adult social care sector (direct, indirect and induced employment)

and the level of productivity in the sector (GVA per worker).

Sector characteristics

The adult social care sector is made up of public, private and voluntary sector service

providers. Over 2,000 sites provide adult social care services, and most these (72%) are run

by private service providers. The largest number of sites (800) provide nursing care.

Additionally, 1,700 people receive direct payments and directly employ their own staff

(Personal Assistants, PAs). The total number of sites providing adult social care in Wales is

summarised in Table ES1.1.

Table ES1.1 Estimated total sites providing adult social care in Wales - 2016

Type of service Number of sites where services are provided

Residential care 530

Nursing care 820

Domiciliary care 520

Day care 60

Other services 130

Direct employers 1,700

Total – excluding direct employers 2,070

Total – including direct employers 3,760

All numbers rounded to nearest 10. Totals may not equal the sum of services due to rounding.

There are estimated to be nearly 80,000 jobs (nearly 60,000 Full Time Equivalents, FTEs) in

the adult social care sector in Wales. Most of these are in the private sector (62%). When

directly employed PAs are included, there are 83,400 jobs (61,000 FTE). Most jobs are in

the residential care sector. The total number of jobs and FTE by type of provision is

presented in Table ES1.2.

Table ES1.2 Estimated number of jobs and FTEs in adult social care sector in Wales, 2016

Type of service Jobs FTE

Residential care 24,700 18,100

Nursing care 7,300 5,500

Domiciliary care 23,500 16,800

Day care 9,100 6,800

Other services 15,300 12,000

Direct employers 3,600 1,600

Total – excluding direct employers 79,800 60,000

Total – including direct employers 83,400 61,600

All numbers rounded to nearest 100. Totals may not equal the sum of services due to rounding.

Direct economic value of the adult social care sector

The direct economic value of the adult social care sector has been estimated using three

different approaches: the input approach; the expenditure approach; and the output


Final report ix

approach. This was to increase the robustness of the estimates, as there were strengths

and weaknesses with the availability and quality of the data required for each of approach.

Income approach

The income approach estimates the total income received by representatives of the sector in

the form of wages and other income. These types of income were estimated using earnings

(for wages) and the Gross Operating Surplus (GOS) generated in the sector (other income).

In the case of the adult social care sector, the large majority of income in the sector will be

earned in wages paid to social care workers.

Table ES1.3 presents the results using the income approach. In Wales in 2016, it was

estimated that adult social care GVA was £1.2 billion using this approach. The largest

proportion of GVA was estimated to be in the residential care sectors (28% of the total value

of the sector).

Table ES1.3 Earnings estimates of adult social care and related GVA

Earnings (£’000) GOS (£’000) GVA estimates (£’000)

Residential care 298,412 29,600 328,012

Nursing care 92,583 57,734 150,317

Domiciliary care 258,333 33,933 292,266

Day care 114,643 0 114,643

Other services 242,761 0 242,761

Personal Assistants 25,549 0 25,549

Total 1,032,281 121,268 1,153,549

Individual row totals may be not sum due to rounding. Totals may not equal the sum of services due to rounding.

Expenditure approach

The expenditure approach involves estimating the total level of expenditure on adult social

care in Wales (public and private funding). This is then converted to GVA (turnover less

purchase of intermediate goods and services) based on turnover (represented by

expenditure) to GVA ratios provided in the Annual Business Survey (ABS).

Table ES1.4 presents the results using the expenditure approach. In Wales in 2016, it was


proportion of GVA was estimated to be in the residential care sectors (42% of the total value

of the sector).

Table ES1.4 Expenditure estimates of adult social care and related GVA

Total expenditure (£’000)

Turnover to GVA ratio

GVA (£’000)

Residential care 652,122 77% 502,078

Nursing care 264,360 80% 210,656

Domiciliary care 369,843 49% 179,771

Day care 141,626 49% 68,841

Other services 300,648 67% 200,342

Personal Assistants 61,936 67% 41,272

Total 1,790,535 1,202,959



Final report x

Output approach

The output approach measures the output of the sector by estimating the number of units of

each type of service provided, and multiplying this by a unit cost for the service. This

estimates the total level of output (the equivalent of turnover) in the sector, which is then

converted to GVA.

Table ES1.5 presents the results using the output approach. In Wales in 2016, it is


proportion of GVA is estimated to be in the residential and nursing care sectors (63% of the

total value of the sector).

Table ES1.5 Output estimates of adult social care and related GVA

Total output (£’000) Turnover to GVA ratio GVA (£’000)


Nursing care 448,394 80% 357,304


Day care 88,930 49% 43,226

Other services 300,648 67% 200,342

Direct payments 22,530 49% 10,951

Total 1,829,119 1,184,262


Indirect and induced economic value of the adult social care sector

The estimations above describe the direct economic value of the adult social care sector.

The sector also contributes to the economy through:

■ Indirect effects - resulting from the purchase of intermediate goods and services by the

adult social care sector in delivering its services, which support additional employment

and GVA within its supply chain; and

■ Induced effects - resulting from purchases made by those directly and indirectly

employed in the adult social care sector, who use their earnings to buy other goods and

services.

It was estimated that the indirect effects of intermediate purchases made by the adult social

care sector contribute an additional 31,000 jobs1 and between £554 million and £583 million

of GVA in Wales.

The induced effects (associated with the purchases of goods and services by individuals

directly or indirectly employed by the sector) were estimated to support a further 12,000 jobs

and £543 million to £567 million of GVA in the wider economy. These are similar in size to

the indirect GVA effect, but smaller than the indirect employment effect.

1 These are jobs, not FTE


Final report xi

Key indicators

The key findings from the research are presented in Table ES1.6. This presents estimates

which show that:

■ There are over 83,000 jobs in the adult social care sector, and there were nearly 62,000

FTE jobs. These jobs generated around £1.2 billion in GVA, and the level of productivity

(GVA per FTE) was estimated to be between £18,700 and £19,500 per FTE job.

■ The indirect effect of the adult social care sector was estimated to be over 31,000 jobs (or

23,000 FTEs) and between £554 million and £583 million in GVA. The indirect effect is

due to the purchase of intermediate goods and services by the adult social care sector.

■ The induced effect of the adult social care sector (additional spending by those directly

and indirectly employed through the adult social care sector) is estimated to be the

employment of over 12,000 (9,000 FTE jobs) and between £545 million and £567 million

of GVA.

The total direct, indirect and induced value of the adult social care sector in Wales was

estimated to be nearly 127,000 jobs, nearly 94,000 FTE jobs and between £2.2 billion and

£2.4 billion in GVA.

Table ES1.6 Summary of findings

Income approach


Output approach

Total direct employment 83,400

Total FTE employment 61,600

Total direct GVA (£’000) 1,153,549 1,202,959 1,184,262

Estimated productivity per job (£) 13,800 14,400 14,200

Estimated productivity per FTE (£) 18,700 19,500 19,200

Indirect employment (jobs) 31,200

Indirect employment (FTE) 23,000

Induced employment (jobs) 12,200

Induced employment (FTE) 9,000

Total jobs due to adult social care activity 126,800

Total FTE jobs due to adult social care activity 93,600

Indirect GVA (£’000) 553,738 582,604 562,020

Induced GVA (£’000) 542,532 567,406 554,924

Total GVA due to adult social care activity (£’000) 2,249,820 2,352,970 2,301,207

All employment numbers rounded to nearest 100, productivity numbers rounded to the nearest £100. Totals may

not equal the sum of services due to rounding.


Final report 1

1 Introduction Skills for Care and Development (SfCD) is the sector skills council for people

working in early years, children and young people's services, and those working in

social work and social care for adults and children in the UK. They have four

partner organisations, one in each nation of the UK. These are Skills for Care (SfC)

in England; Northern Ireland Social Care Council in Northern Ireland; Scottish Social

Services Council (SSSC) in Scotland; and Social Care Wales in Wales.

SfCD required robust estimates of the current economic value of the adult social

care sector in each of the four nations of the UK. These estimates will be used in

policy discussions and decisions about the sector. The evidence base will

demonstrate how the sector contributes to the economy. The estimates may help to

influence the views of decision-makers who see social care as a drain or burden to

the economy.

1.1 Research aims

The objective for this research was to estimate the economic value of the adult

social care sector services in the UK, and the value of the sector in each of the four

nations individually. This included:

■ The annual Gross Value Added (GVA) generated directly by the adult social care

sector (including public sector activities within the sector as well as the

independent sector) (direct impact);

■ The supply chain multiplier for the adult social care sector (indirect impact); and

■ The wage multiplier for the adult social care sector (induced impact).

This report presents additional key metrics which indicate the economic importance

of the sector, including:

■ Employment (direct employment, indirect and induced employment); and

■ Productivity - GVA per worker for the adult social care sector. This is a key

metric for the Treasury (HMT) when assessing economic value.

1.2 Purpose of this report

This report presents the estimated economic value of the adult social care sector in

Wales. The economic value of the sector has been calculated using three different

approaches: the input approach; the expenditure approach; and the output

approach. This was to increase the robustness of the estimates, as there were

strengths and weaknesses with the availability and quality of the data required for

each approach.

The methodology used to estimate the economic value of the adult social care

sector in Wales was informed by consultations with the project steering group in

Wales and a review of relevant literature. A detailed mapping of appropriate and

available data framed by the agreed methodological framework was undertaken.

This was followed by the collection of suitable data and the subsequent estimation

of the economic value of the sector.


Final report 2

1.3 Structure of this report

The report continues in the following sections:

■ Section 2 describes the size and structure of the adult social care sector;

■ Section 3 estimates the direct economic value of the adult social care sector

using the input approach;


using the expenditure approach;


using the output approach;

■ Section 6 estimates the induced and indirect economic value of the adult social

care sector;

■ Section 7 presents the conclusions from the research, including the key

economic indicators and comparisons to other research and economic sectors.

■ Annex 1 provides more details about the methodology used to estimate the

economic impact of the adult social care sector in Wales; and

■ Annex 2 shows the results of a sensitivity analysis, where some of the

assumptions used in the calculation of the economic value of the sector have

been varied.


Final report 3

2 Sector characteristics This section provides key characteristics of the adult social care sector in Wales.

These characteristics describe the size and structure of the sector in Wales.

2.1 Number of service providers

A number of sector specific and Office for National Statistics (ONS) datasets have

been used to provide a description of the adult social care sector in Wales.

Information collected by the Care Inspectorate Wales (CIW, formerly Care and

Social Services Inspectorate Wales, CSSIW) and Data Cymru, data from the

government’s Inter-Departmental Business Register (IDBR) and from SfC provide

data to estimate the number of service providers in Wales. More details about the

methodology are presented in Annex 1.

2.1.1 Regulated service providers

The CIW collect data of all sites providing regulated care services in Wales. The

type of service provided at these sites is categorised, which means that the number

of sites providing each type of regulated adult social care service can be presented.

It was possible to identify the number of sites providing regulated services, but not

the number of service providers (as this was not included in the CIW data). Further

interrogation of the dataset, and using information from Carehome.co.uk2 and

information from Data Cymru allowed the services to be disaggregated by type of

provider.

The number of sites providing regulated adult social care services are presented in

Table 2.1 (this provides 100% coverage of regulated services in Wales). In

summary, there were nearly 1,600 sites providing regulated adult social care in

2016. Most regulated sites were providing residential or nursing care (69%). The

largest number of sites are run by private sector service providers (1,140, 72% of

regulated providers).

2 This was used to establish which care homes were Local Authority care homes, as it was not clear from the entries in the CIW database which care homes were public sector and which were independent.


Final report 4

Table 2.1 Number of service providers and sites - regulated services, 2016

Type of provider

Type of service Number of service providers

Number of sites providing services

Public Residential care - 100

Nursing care - -

Domiciliary care - 40

Day care - -

Other services - -

Total - 140

Private Residential care - 130

Nursing care - 650


Day care - -

Other services - 10

Total - 1,140

Voluntary Residential care - 30

Nursing care - 170


Day care - -

Other services - -

Total - 300

Total Residential care - 270

Nursing care - 820


Day care - -

Other services - 10

Total - 1,580

Source: CIW, (2016) Chief Inspectors Annual Report, 2015-16; CIW: Number of registered services,

accessed November 2017; www.Carehome.co.uk; the Data Cymru SCWDP workforce data collection

2016; All numbers rounded to nearest 10. Totals may not equal the sum of services due to rounding.

2.1.2 Non-regulated service providers

The CIW database of registered services does not contain any information about

non-regulated adult social care providers in Wales. Non-regulated services are

those which are not inspected by CIW, and include the provision of community care,

advice and guidance, befriending services, non-personal care, residential care for

homeless individuals and women’s refuges.

To estimate the size of the number of non-regulated service providers, information

from the IDBR, SfC and CIW was used. The estimation process involved:

■ Data was taken from the IDBR which showed the total number of local sites in

the relevant Standard Industrial Classification (SIC) code classes

■ Information from SfC was used to estimate the proportion of these local sites

which were providing adult social care (as the SIC code class includes providers

of other caring and charitable services, such as children’s services). This was


Final report 5

multiplied by the number of local sites in the IDBR for Wales to provide an

estimate of the total number of adult social care sites.

■ The number of regulated adult social care sites (taken from the CIW database)

was subtracted from the total number of adult social care sites. This provided an

estimate of the number of non-regulated adult social care sites in Wales.

■ The proportion of non-regulated providers in each type of service was taken from

the SfC estimates in England, and applied to the total number of non-regulated

providers in Wales.

It should be noted that there are difficulties in how businesses identify themselves

(SIC code category) and the coding provided in the CIW. Large businesses can

offer services across multiple SIC code categories, so may be in a different SIC

code category whilst providing care. The calculations of non-regulated adult social

care sites are based on assumptions and data manipulation, and is therefore less

certain than the data taken from the CIW.

Therefore, the estimates of the non-regulated sector are not as robust as the

estimates of the regulated sector. More details of this methodology can be found in

Annex 1.

Table 2.2 presents the number of non-regulated adult social care sites in Wales. In

summary, it is estimated that there are nearly 500 locations providing non-regulated

services. These are estimated to mainly (54%) provide residential care services.

Table 2.2 Number of employers – non-regulated services, 2016

Type of provider

Type of service Number of service providers

Number of sites providing services

Total Residential care - 260

Nursing care - -


Day care - 60

Other services - 120

Total - 480

Source: CIW, (2016) Chief Inspectors Annual Report, 2015-16; CIW: Number of registered services;

IDBR; Skills for Care National Minimum Dataset – Social Care; Assumptions accepted as reasonable

by Social Care Wales; All numbers rounded to nearest 10. Totals may not equal the sum of services

due to rounding.

2.1.3 Direct payment recipients

The number of individuals receiving direct payments is collected by the Welsh

Government, and in 2016 an estimated 5,900 adults received direct payments from

local authorities. Individuals can use the money they receive from direct payments

for a variety of purposes, including employing their own staff, residential or day care,

or paying subscriptions and memberships to support themselves.

Some individuals receiving direct payments will directly employ Personal Assistants

(PAs) to provide care. Of those employing PAs, some will employ social care

workers from an agency. These agencies will be captured in the CIW data.

However, some direct payment recipients will choose to directly employ PAs. These

individuals act as employers, but will be excluded from the IDBR and CIW data, and

are not captured in the estimates above.


Final report 6

Operating on the assumption that situation in Wales is comparable with that in

England, SfC estimates were used to estimate the number of direct payment

recipients who directly employ PAs in Wales. SfC estimate that in England just

under one third (29%) of people receiving direct payments directly employ PAs.

This percentage has been used to estimate the number of direct employers in

Wales. In Wales, this would mean that there are an estimated 1,700 individuals

who employ PAs (see Table 2.3).

Table 2.3 Number of individual employers, 2016

Type of service

Number of individuals receiving direct payments 5,900

Percentage who directly employ PAs 29%

Estimated number of individuals who directly employ PAs in Wales 1,700

Source: StatsWales - Adults receiving services by local authority, client category and age group; Skills

for Care ‘Individual employers and Personal Assistants’; All numbers rounded to nearest 100.

2.2 Number of jobs

A number of data sources have been used to estimate the number of jobs in the

adult social care sector in Wales. These include information collected by Social

Care Wales and Data Cymru, the Welsh Government and research by SfC. More

details about the methodology are presented in Annex 1. The number of jobs

relates to all job roles in the adult social care – those providing care to service users

and all support staff (for example cleaners, security staff).

2.2.1 Regulated service and public sector provision

The Welsh Government, through data collected by local authorities, provide data for

the number of public sector jobs in the adult social care sector. This data can be

differentiated by the services the jobs are involved with, and jobs for children’s care

services can be easily identified and removed from the analysis. The number of

FTEs is also provided in the dataset.

Social Care Wales collect information about the number of jobs in regulated services

commissioned by local authorities. This is collected in the Social Care Workforce

and Development Programme (SCWDP) research (Data Cymru, 2016). The

research allows the number of jobs to be differentiated by type of service and

between type of provider.

The SCWDP research does not provide the number of FTE jobs in regulated

services. However, it provides a breakdown of the percentage of staff who work full-

time and part-time. (52% work full-time and 48% part-time). These percentages

were used to estimate the number of FTE staff working in regulated services in the

private and voluntary sectors.

Table 2.4 presents the number of jobs and the number of FTE in the adult social

care sector in Wales. It shows that:

■ There are an estimated 72,100 jobs in the regulated adult social care sector, and

this equates to 54,100 FTE staff;

■ Most jobs are in the private sector. There are an estimated 44,500 jobs and

33,800 FTE (62%)


Final report 7

■ There are 16,000 public sector jobs in the adult social care sector in Wales, and

these fill over 11,000 FTE jobs.

■ There are an estimated 11,700 jobs in the voluntary sector, which equates to

8,900 FTEs.

Table 2.4 Number of jobs - regulated service and public sector, 2016

Type of provider Type of service Jobs Average hours FTE

Public Residential care 3,900 24.0 2,500

Nursing care - -

Domiciliary care 4,800 22.8 3,000

Day care 2,600 27.4 1,900

Other services 4,700 32.0 4,100

Total 16,000 26.6 11,500

Private Residential care 13,100 28.1 9,900

Nursing care 5,800 28.1 4,400


Day care 4,400 28.1 3,400


Total 44,500 28.1 33,800

Voluntary Residential care 3,400 28.1 2,600

Nursing care 1,500 28.1 1,100


Day care 1,200 28.1 900


Total 11,700 28.1 8,900

Total Residential care 20,400 - 15,100

Nursing care 7,300 - 5,500

Domiciliary care 22,900 - 16,700

Day care 8,200 - 6,200

Other services 13,400 - 10,700

Total 72,100 - 54,100

Source: Data Cymru: SCWDP workforce data collection report; Staff of local authority social services

departments by local authority and post title.; All numbers rounded to nearest 100. Totals may not

equal the sum of services due to rounding.

2.2.2 Non-regulated service providers

The following steps were used to estimate the number of jobs in non-regulated adult

social care services:

■ The number of non-regulated service sites in Wales (see Table 2.2) was

multiplied by the average number of jobs per site providing non-regulated adult

social care services in England (estimated from SfC data). This provided an

estimate of the total number of jobs in non-regulated services in Wales.

■ The proportion of jobs in each type of non-regulated service in England (Day

Care, Other services etc., estimated from SfC data) was multiplied by the total


Final report 8

number of non-regulated adult social care jobs in Wales to provide an estimate

of jobs by type of service.

■ The same full-time / part-time split as was described in the regulated service

sector (section 2.1) was applied to workers in the non-regulated sector to

estimate the number of FTEs.

Table 2.5 presents the estimated number of jobs in non-regulated adult social care

services. It shows that there were an estimated 7,500 jobs and 5,700 FTEs. More

details of this methodology can be found in Annex 1.

Table 2.5 Number of jobs – non-regulated sector, 2016

Type of provider Type of service Jobs Average hours

FTE

Total Residential care 4,300 28.1 3,300

Nursing care - - -

Domiciliary care 600 28.1 500

Day care 900 28.1 700


Total 7,500 28.1 5,700

Source: CIW, (2016) Chief Inspectors Annual Report, 2015-16; CIW: Number of registered services;

IDBR; Data Cymru: SCWDP workforce data collection report; Skills for Care: Size and Structure of the

Adult Social Care sector in England; All numbers rounded to nearest 100. Totals may not equal the

sum of services due to rounding.

2.2.3 Direct employers

There are no official estimates of the number of directly employed PAs in Wales. A

recent study by SfC in England provides robust estimates of the number of people

employing PAs (29% of direct payment recipients), the number of workers they

employ (an average of 2.1 workers per employer) and the number of hours PAs

work a week (17 hours per week). Using this research and the number of direct

employers (Table 2.3), it was estimated that there are 3,600 PA jobs in Wales. This

equates to 1,600 FTE.

Table 2.6 Number of Personal Assistants

Type of service Jobs Average hours FTE

Personal Assistants 3,600 17 / week 1,600

Source: StatsWales - Adults receiving services by local authority, client category and age group; Skills

for Care ‘Individual employers and Personal Assistants’; All numbers rounded to nearest 100

2.3 Summary

The summary tables below (Table 2.7 and Table 2.8) present a summary of the size

and structure of the adult social care sector in Wales. In 2016, it was estimated that

there were over 2,000 sites providing adult social care in Wales. If direct employers

are included, there are over 3,700 employers in the adult social care sector in

Wales. There are nearly 80,000 jobs at these sites (excluding directly employed

PAs; over 83,000 if PAs are included), which is the equivalent of 60,000 FTEs

(61,600 if PAs are included).


Final report 9

Table 2.7 Total sites providing adult social care in Wales - 2016

Type of service Number of sites where services are provided

Residential care 530

Nursing care 820

Domiciliary care 520

Day care 60

Other services 130

Direct employers 1,700

Total – excluding direct employers 2,070

Total – including direct employers 3,760

Source: Table 2.1 to Table 2.6; All numbers rounded to nearest 10. Totals may not equal the sum of

services due to rounding.

Table 2.8 Total number of jobs in the adult social care sector in Wales - 2016

Type of service Jobs FTE

Residential care 24,700 18,100

Nursing care 7,300 5,500

Domiciliary care 23,500 16,800

Day care 9,100 6,800

Other services 15,300 12,000

Personal Assistants 3,600 1,600

Total – excluding Personal Assistants 79,800 60,000

Total – including Personal Assistants 83,400 61,600

Source: Table 2.1 to Table 2.6; All numbers rounded to nearest 100. Totals may not equal the sum of


Evidence 1 Employment by nationality

The adult social care sector, like many others in the UK employs workers from other nations. The SSSC undertook an analysis of the social care workforce by nationality, using data from the APS, for all nations of the UK. It was not possible to disaggregate adult and children’s services for this analysis and the number of relevant responses in the APS was small, therefore percentages were reported.

In Wales, since 2011 the percentage of workers from the UK in the social care sector has remained relatively stable (between 94.5% and 96.3%). However, the make-up of the non-UK (or migrant) workforce has altered in this time. Although representing a small proportion of the total workforce, the percentage of non-EU workers has decreased (3.9% in 2011, to 1.4% in 2015, with an increase to 2.2% in 2016). At the same time, the percentage of the workforce made up of EU workers has increased from 1.6% to 2.4%.

The effect of Brexit on EU workers in the adult social care sector is unknown. If Brexit reduces the supply of adult social care workers from other EU countries, employers will have to recruit from other sources. This could lead to an increase in the proportion of the workforce who are born in the UK, or to a reversal of the trend of a decreasing proportion of workers being recruited from non-EU countries.


Final report 10

3 Income approach The first approach used to produce estimates of GVA in the sector is the income

method. The total income received by representatives of the sector in the form of

wages and other income provides an estimate of the value added by the sector.

These types of income are estimated using earnings (for wages) and the Gross

Operating Surplus generated in the sector (for other income). In the case of the

adult social care sector, the large majority of income in the sector will be earned in

wages paid to social care workers.

3.1 Earnings - regulated and public sector

The main source of information for earnings in Wales is the Annual Survey of Hours

and Earnings (ASHE). However, the data from ASHE overestimates actual earnings

in the adult social care sector due to how the data is collected.3 Therefore, data

collected by SfC in England (NMDS-SC) has been used alongside data from ASHE

to estimate the earnings in the adult social care sector in Wales.

Earnings information provided by SfC has been adjusted using information from

ASHE. The average earnings in the adult social care sector in ASHE in Wales have

been divided by the average earnings from the sector in ASHE in England, to obtain

the ratio of earnings in the sector between the two nations. This ratio was then

multiplied by the value of earnings in England from the NMDS-SC. An additional

benefit of using data from SfC is that it allows earnings to be disaggregated by type

of provider and type of service provided.

The average earnings for a FTE in the adult social care sector in Wales is presented

in Table 3.1. This shows that:

■ The average earnings in the sector are £16,900 per FTE.

■ The average earnings per FTE in the public sector are estimated to be higher

than in the private and voluntary sectors, for all types of service (more than 12%

higher for all types of service).

■ The total value of earnings in the adult social care sector in Wales is estimated

to be £913 million.

■ Although earnings per FTE are higher in the public sector, the highest proportion

of total earnings are in the private sector (£529 million, 58%), since this is where

most of the workforce is employed.

Earnings in the adult social care sector in Wales are lower than average earnings in

Wales. The average earnings per FTE in the regulated adult social care sector in

Wales was estimated to be £16,900. Average (mean) earnings for a FTE in Wales

are estimated to be £29,200 (average earnings for a full-time worker) in 2016.

Therefore, the earnings in the adult social care sector represent 58% of average

earnings.

3 ASHE estimates do not include self-employed workers, or jobs in businesses which are not required to be PAYE registered (most likely small firms with low levels of pay). Therefore the ASHE estimates exclude many low paying jobs, which can lead to an overestimation of earnings.


Final report 11

Table 3.1 Estimated average and total earnings in the regulated adult social care

sector, 2016

Type of provider Type of service FTEs Earnings per FTE Total (£’000)

Public Residential care 2,500 19,400 48,786

Nursing care 0 18,800 0


Day care 1,900 18,300 35,278

Other services 4,100 26,300 107,446

Total 11,500 - 245,020

Private Residential care 13,100 15,800 156,872

Nursing care 5,800 16,800 73,318


Day care 4,400 16,100 54,142

Other services 6,800 16,900 87,847

Total 44,500 - 529,181

Voluntary Residential care 3,400 15,800 41,218

Nursing care 1,500 16,800 19,264


Day care 1,200 16,100 14,226

Other services 1,800 16,900 23,082

Total 11,700 - 139,042

Total Residential care 14,900 - 246,876

Nursing care 5,500 - 92,583

Domiciliary care 16,400 - 251,764

Day care 6,100 - 103,646

Other services 10,600 - 218,375

Total 53,500 £16,900 913,244

Source: Annual Survey of Hours and Earnings; Labour Force Survey: Skills for Care National Minimum

dataset – social care; Assumptions accepted as reasonable by Social Care Wales; FTEs and earnings

rounded to nearest 100. Individual row totals may be not sum due to rounding. Totals may not equal

the sum of services due to rounding.

3.2 Earnings - non-regulated sector

Table 3.2 presents the earnings in the non-regulated adult social care sector in

Wales. Again, the estimated number of FTEs has been multiplied by the average

earnings for an FTE. The value of earnings in the non-regulated adult social care

sector in Wales is estimated to be £93 million.


Final report 12

Table 3.2 Estimated average and total earnings in the non-regulated adult social

care sector, 2016

Type of provider Type of service FTEs Earnings per FTE Total (£’000)

Total Residential care 3,300 15,800 51,534

Nursing care - - -

Domiciliary care 500 14,400 6,569

Day care 700 16,100 10,997

Other services 1,400 16,900 24,386

Total 5,700 16,200 93,448



rounded to nearest 100. Individual row totals may be not sum due to rounding. Totals may not equal


3.3 Gross Operating Surplus

In addition to earnings / wages, additional economic income is generated by the

adult social care sector. This is estimated by the Gross Operating Surplus (GOS).

GOS is defined as income minus operating costs. In estimating GOS, it is assumed

that only private sector care providers are run ‘for profit’, and therefore generate a

GOS (further details on the calculation of GOS can be found in Annex 1 (A1.1 and

A1.3.2).

The estimation of the GOS in the adult social care sector will include the following

costs:

■ Staff costs;

■ Materials required to deliver day to day services;

■ Transportation costs; and

■ Other day to day costs associated with providing adult social care.

Costs which are excluded from the estimation of GOS are:

■ Rents;

■ Exceptional purchases (such as repairing property or capital equipment);

■ Depreciation and amortisation of capital assets (the decrease in value of an

asset as it is used and aged, for example vehicles or computer systems);

■ Interest payments on money owed; and

■ Taxation.

It is important to note that the GOS does not equal the profit taken by owners

and shareholders. Only a subset of total costs are included in the GOS

calculation. The GOS is the equivalent of earnings before interest, taxes,

depreciation, amortization and restructuring or rent costs (EBITDAR).4

A positive GOS can lead to small or even negative overall profits. This is

because the costs which are excluded from the estimated GOS can equal or

exceed the value of the GOS. Figure 3.1 (taken from Competition and Markets

Authority (CMA), 2017) illustrates this. Despite an average GOS of between 14%

4 The EBITDAR value has been used in the analysis as it is the preferred measure in both the LaingBuisson report and the CMA market analysis. The EBITDA measure, where rents and restructuring costs are assumed to be operating costs is used in the sensitivity analysis in Annex 1


Final report 13

and 16%, the level of overall economic profit in the adult social care sector (where

all costs are included) is estimated to be close to zero.

Figure 3.1 Residential care industry operating surplus profile, 2010-2016

Source: CMA (2017) Care Homes Market Study – figure 4.3

Two main studies have provided insights into the GOS in the residential care sector.

LaingBuisson (2017) provides detailed information for the accounts of the big six

residential care providers. This shows an average GOS (or EBITDAR earnings) of

nearly 20%; but this leads to a significant pre-tax loss.

The CMA (2017) provides a more detailed assessment of GOS in the residential

care sector. This examined the annual accounts of all residential care operators in

the UK that are required to file their accounts at Companies House (CH). This found

that in 2015/16 (the most recent year that comprehensive information was

available), the GOS in the sector was around 16%, only marginally lower than in the

LaingBuisson report.

For this study, a detailed examination of the financial returns of all adult social care

providers was not undertaken. To estimate the GOS in residential care, the average

GOS (EDITBAR) value from the CMA study has been used as an assumed GOS

margin. This is because the CMA estimate includes all adult social care providers in

the UK who filed reports at CH, and is assumed to be a reasonable measure of

GOS in each nation of the UK.


Final report 14

To estimate the value of GOS, the assumed GOS margin (16%) was multiplied by

the total output from the private residential sector. This gave an estimate of nearly

£87 million of GOS in the residential adult social care sector in Wales.

The GOS for domiciliary care providers has been estimated using information taken

from the United Kingdom Homecare Association (UKHCA, 2018). This research

provided information which was used to estimate an equivalent of the EBITDAR

value to represent GOS. It was estimated that the GOS margin in the home care

market was 11.3% for private domiciliary providers and 8.3% for voluntary

providers.5 This is a lower estimated value of GOS than for residential care

services. This could be because there are lower rental costs and less capital

equipment is used (meaning there is less depreciation and exceptional purchases).

The estimated GOS in the domiciliary sector is calculated by multiplying these

values by the output of the private and voluntary domiciliary care sector. This was

estimated to be nearly £34 million in Wales in 2016.

There is no information available for the value of GOS for day care and other

services. Therefore, no attempt has been made to estimate the GOS in these

services. Finally, it has been assumed that there is no GOS in the employment of

PAs – it is assumed that they are directly employed and there is no additional

income above their pay.

3.4 Direct employers

Research by SfC (2017) has produced estimates of the average earnings of PAs in

England (£17,500 per FTE). The average earnings for a PA FTE in Wales have

been calculated using the same approach as outlined in section 3.1. This is

estimated to be £15,600. It is estimated that there are 1,600 FTE PAs in Wales.

This means that the total earnings of PAs in Wales are estimated to be £26 million

(see Table 3.3). More details of this methodology can be found in Annex 1.

Table 3.3 Estimated average and total earnings of Personal Assistants, 2016

Type of service Earnings per FTE FTEs Total (£’000)

Personal Assistants £15,600 1,600 25,549



rounded to the nearest 100. Individual row totals may be not sum due to rounding.

3.5 Estimated GVA

The estimated level of GVA is calculated by summing the value of total earnings and

GOS generated in the income approach. In Wales in 2016, it was estimated that

adult social care GVA was £1.2 billion using this approach. The largest proportion

of GVA is estimated to be in the residential care sectors (28% of the total value of

the sector), although the domiciliary and other services sectors also have a large

proportion of the total GVA (see Table 3.4).

5 UKHCA (2018) A Minimum Price for Homecare. Indicators excluded in the estimated GOS were: Net profit / surplus; Premises, utilities and services; and Other Business overheads. Indicators included in the GOS estimate were: care worker costs; staffing, recruitment and training; consumables and professional costs. For voluntary providers, the net profit / surplus was assumed to be zero. These indicators were excluded as it is assumed the costs would be included in the EBITDAR measure.


Final report 15

Table 3.4 Earnings estimates of adult social care and related GVA

Earnings (£’000) GOS (£’000) GVA estimates (£’000)


Nursing care 92,583 57,734 150,317


Day care 114,643 0 114,643

Other services 242,761 0 242,761

Personal Assistants 25,549 0 25,549

Total 1,032,281 121,268 1,153,549

Source: Inter-departmental Business Register; CIW, (2016) Chief Inspectors Annual Report, 2015-16;

CIW: Number of registered services; Skills for Care Size and Structure of the Adult Social Care sector

in England; Data Cymru: SCWDP workforce data collection report; Staff of local authority social

services departments by local authority and post title; Annual Survey of Hours and Earnings; Labour

Force Survey: Skills for Care National Minimum dataset – social care; LaingBuisson (2017) Care of

Older People; CMA (2017); Assumptions accepted as reasonable by Social Care Wales. Individual

row totals may be not sum due to rounding. Totals may not equal the sum of services due to rounding.

Evidence 2 Anticipated growth in demand for services in Wales

The population of Wales is estimated to grow by over 150,000 people by 2039, to a total population of 3.3 million (a 5% growth in population). However, the population of individuals aged 65 or over is anticipated to grow by 250,000 (from 636,000 in 2016). This represents a growth of 40% in the number of people aged 65 or over in Wales (and a decrease in the number of people aged under 65).

This is expected to drive an increase in demand for adult social care in future years in Wales. The UK Commission for Employment and Skills (UKCES) produced estimates of future demand for employment in different occupational groups. The research projected future demand until 2024. The adult social care sector was not modelled as a specific sector, and the most appropriate category for the sector would be the occupational group “Caring, Leisure and other service activities”. In Wales, employment in this group was estimated to grow by an average of 0.9% each year between 2014 and 2024. This provides further evidence that the demand for adult social care is likely to increase in the future in Wales.


Final report 16

4 Expenditure approach The second method to estimate the economic value of the adult social care sector is

the expenditure approach. This approach involves estimating the total level of

expenditure on adult social care in Wales (public and private funding). This is then

converted to GVA (output less purchase of intermediate goods and services) on the

basis of turnover (represented by expenditure) to GVA ratios provided in the Annual

Business Survey (ABS).

Expenditure flows from funders to the providers of adult social care services.

However, there are different sources of funding for adult social care services. These

are:

■ Public sector funding – individuals using care services who are wholly funded by

the state. This includes expenditures made directly between the public sector

and the provider of adult social care services to deliver services to individuals,

and funding given directly to service users to purchase their own care (direct

payments);

■ Self-funders – individuals who use care services and pay the full costs

themselves; and

■ Co-funding – individuals who receive some public sector funding for care

services, but who are required to ‘top-up’ the public funding to pay the full care

charges.

4.1 Public sector funding and co-funding

The Welsh Government collects data on the public sector funding of adult social

care. It also collects data on public sector “income” for adult social services. This is

defined as payments from arrangements with other organisations and client

contributions to services. This information is presented in Table 4.1, and shows:

■ The total value of public sector expenditure was over £1.1 billion in 2015/16, with

a further £286 million coming from client contributions and joint arrangements.

This gives a total estimate of nearly £1.4 billion of gross expenditure of adult

social care in Wales.

■ Most of the public sector and co-funding expenditure was for older people (53%

of gross expenditure).

■ Care for older people was more likely to be partially funded by joint

arrangements or co-funding than other types of care; 66% of all adult social care

co-funding was for the care of older people.


Final report 17

Table 4.1 Public and co-funding of adult social care, 2015-16

Type of service Public sector funding (£’000)

Co-funding (£’000)

Total (£’000)

Older people (65+) 546,823 188,243 735,066

Physically disabled (18+) 97,327 24,022 121,349

Learning disabled (18+) 343,088 55,465 398,553

Mental health needs (18+) 78,004 15,290 93,293

Other 36,866 3,291 40,157

Total 1,102,107 286,311 1,388,418

Source: Social services revenue expenditure by client group (£ thousand); Income from Sales, fees

and charges – StatsWales. Totals may not equal the sum of services due to rounding.

4.2 Self-funding

The size and scale of expenditures on adult social care by self-funders is difficult to

estimate. This is because there is no relevant data source which estimates either

the level of expenditure or the number of individuals who fund their own care.

There are several recent studies that have explored self-funding of residential adult

social care services. LaingBuisson (2017) estimate the proportion of residential and

nursing care residents who are self-funders in Wales (32%). Previous studies have

estimated that in England over 40% of care home places are for self-funders (IPC

2011, 2015). These estimates are similar to those presented in the LaingBuisson

report, therefore the estimate of 32% for Wales appears to be consistent with other

studies.

There is less evidence about the number of self-funders for non-residential adult

social care. A review of existing evidence was undertaken to establish the size of

the self-funder market for non-residential social care in the UK. A summary of the

findings from these studies is presented in Annex 1. From this, it has been

estimated that the proportion of older people who fund their own domiciliary, day

and other care in Wales is 21%.

Individuals who self-fund their own care are unlikely to pay the same price for their

care as those funded by the state. Several sources suggest that self-funders are

likely to pay a higher fee for the same care services. The reasons for these

differences could be due to market pressures (local authorities and the NHS buying

services in bulk through tendering, and achieving favourable rates), or because

providers are having to cross subsidise public sector clients by charging a premium

to self-funders.

LaingBuisson (2017) includes an analysis of prices charged to self-funders, and

found that on average the price for a self-funder was 46% (41% for nursing care)

higher than the price for a publicly funded client. The CMA (2017) have also

recently estimated the mark-up for self-funders as being over 40% in residential

care. These are higher mark-up than previous estimates (which were closer to 20%,

LaingBuisson and Joseph Rowntree Foundation, 2008; BUPA, 2011; University of

East Anglia, 2011)). The CMA (2017) suggests that this could be due to the

margins providers can make from publicly funded residents falling in recent years,

therefore the higher mark-up for self-funders is needed to make the business

sustainable. The 46% mark-up has been used in this analysis, and the mark-up has


Final report 18

been applied to the estimated unit costs for funded individuals. These unit costs are

presented in Table 4.2.

The analysis of self-funding is presented in Table 4.2, by type of care provision.

This suggests that in Wales, the total value of self-funded adult social care

expenditure was over £400 million. The largest proportion of self-funding

expenditure was for residential and nursing care (54% of the self-funded total). The

total estimated value of expenditure on adult social care in Wales is over £1.8 billion.

Table 4.2 Estimated total expenditure in adult social care sector, 2015-16

Public and co-funded (£’000)

Unit cost for self-funders (£ per year)

Number of self-funders

Self-funded expenditure (£’000)

Total expenditure (£’000)

Residential care 569,358 36,900 2,200 82,763 652,122

Nursing care 116,551 42,300 3,500 147,809 264,360

Domiciliary care 274,115 15,000 6,400 95,728 369,843

Day care 119,427 10,100 2,200 22,199 141,626

Other services 247,030 - - 53,618 300,648

Direct payments 61,936 - - - 61,936

Total 1,388,418 402,117 1,790,535


and charges - StatsWales; LaingBuisson (2017) Care of Older People; PSSRU Unit Cost of Health and

Social Care; Values for unit cost and number of self-funders is rounded to the nearest 100. Individual

row totals may be not sum due to rounding. Totals may not equal the sum of services due to rounding.

4.3 Estimated GVA

The expenditures calculated above have been converted into GVA using turnover to

GVA ratios for the adult social care sector from the ABS. Turnover to GVA ratios

indicate the level of GVA that is expected to result in a particular sector, from a

given level of expenditure. Applying these ratios to the estimated expenditures

provides an estimate of GVA for the sector of £1.2 billion in 2015/16 in Wales (see

Table 4.3). The largest proportion of GVA was from the residential and nursing care

sub-sectors (£713 million; 59% of total GVA).

Table 4.3 Expenditure estimates of adult social care and related GVA, 2015-16

Total expenditure (£’000) Turnover to GVA ratio GVA (£’000)


Nursing care 264,360 80% 210,656


Day care 141,626 49% 68,841

Other services 300,648 67% 200,342

Direct payments 61,936 67% 41,272

Total 1,790,535 1,202,959


and charges; LaingBuisson (2017) Care of Older People; PSSRU Unit Cost of Health and Social Care;

Annual Business Survey. Individual row totals may be not sum due to rounding. Totals may not equal



Final report 19

Evidence 3 Effect of public funding on adult social care

There are different types of goods and services in an economy, and the markets for different types of goods and services need to be treated differently to ensure that the market functions efficiently. Examples of different types of goods are:

Private goods – a good or service which can be purchased, and when the good is purchased it prevents other individuals from consuming it. This is the most common type of good.

Public goods – a good or service which when one individual benefits from its use it does not prevent anyone else benefitting from the good, and when it is used it does not reduce the amount available to others.

Quasi-public goods – a good or service which falls between public and private, possessing some of the qualities of a public good.

Merit good – a good which provides wider benefits to the economy when consumed.

Private goods with market failures – goods or services which are private goods but where the market does not function correctly, for example due to a lack of information.

If adult social care was treated as a ‘private good’ (all individuals have to self-fund their own adult social care) there would be market failure. This is because some individuals do not have the resources to buy the adult social care they require. Other individuals do not have complete information about their need for social care or the cost of the adult social care they require (for example the health conditions they could develop and their life expectancy), and therefore underestimate the quantity of social care they require.

There are also positive externalities (such as the prevention of healthcare, allowing family members and informal carers to remain in work). This means that individuals underestimate the value of adult social care they would need to purchase.

Therefore, a private market for adult social care would not operate efficiently and would be seen as a market failure. Adult social care should be viewed as a quasi-public good (as all individuals in a society can benefit from it) or a merit good (generating further benefits). Rather than crowding out private investment, the public funding supports a better functioning adult social care market.


Final report 20

5 Output approach The final approach to measure the GVA of the adult social care sector is the output

approach. This measures the output of the sector by estimating the number of units

of each type of service provided, and multiplying this by a unit cost for the service.

This estimates the total level of output (the equivalent of turnover) in the sector,

which can then be converted to GVA (output less purchase of intermediate goods

and services).

5.1 Output from the residential care

5.1.1 Residential care for older adults

LaingBuisson (2017) provides useful data relating to the provision of care services

for older people. This data includes the capacity of nursing and residential care

homes in Wales and the occupancy rate. The Welsh Government also produce

estimates of the capacity of care homes in Wales, and the figures are very close to

those provided in the LaingBuisson report. The figures in LaingBuisson (2017) have

been used in this analysis.

The data shows that the private sector is the largest provider of adult social care in

Wales, and represents 66% of the total residential care capacity, and 85% of total

nursing care capacity for older people (a total of 18,000 beds across the residential

and nursing sector).

The Personal Social Services Research Unit (PSSRU) provide annual estimates for

the unit costs of adult social care in England (PSSRU, 2016). These estimates have

been used to has been used to estimate the output of the residential care in Wales

for 2015/16. These estimates were selected as they provided more differentiation

by type of care and provider. The PSSRU (2016) estimates unit costs for England,

and these prices have been adjusted to Welsh prices using information from the

LaingBuisson (2017).

Table 5.1 presents an estimate of the total output of residential and nursing care for

older individuals in Wales. This was calculated by multiplying the number of

occupants by the weekly cost. The total output of the residential and nursing care

sector for older people was estimated to be over £760 million. The private sector

has the largest output (£546 million; 72% of total output), and the output for nursing

care is higher than for residential care (nursing care represents 57% of the total

residential and nursing care output).


Final report 21

Table 5.1 Capacity and estimated output of care home sector – older people

Private Voluntary Public Total

Capacity (total places)

Nursing 10,800 1,000 1,000 12,800

Residential 7,100 1,100 2,600 10,800

Occupancy (places)

Nursing 10,200 900 900 12,000

Residential 6,200 900 2,200 9,400

Output (£’000)

Nursing 360,839 31,830 55,724 448,394

Residential 185,002 27,410 112,106 324,517

Unit cost (£ per week)

Nursing 680 680 1,170

Residential 570 570 970

Source: LaingBuisson (2017) Care of Older People; StatsWales: Adults receiving services by local

authority, client category and age group; CSSIW register of services; PSSRU Unit Cost of Health and

Social Care (2016). Output totals may be not sum due to rounding.

5.1.2 Residential care for younger adults

The data from LaingBuisson (2017) does not provide full coverage of the adult social

care residential sector. It does not provide estimates of the capacity or occupancy

of residential and nursing care services provided to younger adults (aged 18 – 64).

The Welsh Government provides statistics for the number of beds available and the

average number of younger adults with mental health and learning disabilities who

are resident in residential and nursing care facilities in Wales. These statistics have

been used to estimate the capacity and output for residential care for adults with

mental health and learning disability needs.

A unit cost for residential care for adults with mental health and learning disability

needs has been calculated using the PSSRU (2016) estimates of the unit cost of

social care in England. The unit cost has been weighted based on the number of

individuals with mental health and learning disabilities in Wales, and the prices have

been adjusted to Welsh prices using information from the LaingBuisson (2017).

Using the information described above, Table 5.2 presents the estimated output for

residential care of younger adults with learning disabilities and mental health needs.

In 2015/16, it was estimated that the output for residential care of younger adults

was £177 million in Wales.


Final report 22

Table 5.2 Capacity and estimated output of care home sector – younger adults

Private Voluntary Public Total

Capacity (places)

Nursing - - - -

Residential - - - 3,600

Occupancy (places)

Nursing - - - -


Output (£’000)

Nursing - - - -


Unit cost (£ per week)

Nursing - - - -

Residential - - - 990

Source: PSSRU Unit Cost of Health and Social Care (2016); LaingBuisson (2017); StatsWales: Adults

receiving services by local authority, client category and age group. Output totals may be not sum due

to rounding.

5.2 Output from non-residential adult social care

An approach using data from the Welsh Government and PSSRU has been used to

estimate the output of the non-residential care sector in Wales.

The Welsh Government provides data for the number of individuals receiving

different types of non-residential care in Wales. This provides details of the number

of people receiving public funding for care (31,000) but not the number of self-

funders. The number of self-funders receiving non-residential care was estimated to

be 8,600. The number of individuals receiving care is the sum of self-funders and

those receiving payment for their care.

The unit costs for non-residential care has been calculated from the PSSRU (2016)

estimates. The total output is estimated by multiplying the unit cost by the number

of users and the volume of care used per year. It was not possible to estimate the

usage and unit cost of other services, due to the wide variety of services included in

other services and a lack of available data. Therefore, the level of expenditure has

been used as the value of output for other services.

Table 5.3 presents the output of the non-residential care sector. This shows that the

total output of the sector in Wales was estimated to be nearly £800 million in

2015/16. The domiciliary care sector has the largest output in the non-residential

care sector in Wales.

Table 5.3 Estimated output of other adult social care sectors

Number of users

Unit per person per year

Unit cost (£) Total output (£’000)


Final report 23

Number of users

Unit per person per year

Unit cost (£) Total output (£’000)

Domiciliary care 29,400 572 23 383,486

Day care 10,100 130 67 88,930

Other 15,000 - - 300,648

Direct payments6 1,700 884 15 22,530

Total 795,594

Source: StatsWales: Adults receiving services by local authority, client category and age group;

PSSRU Unit Cost of Health and Social Care (2016); UK Home Care Association (2016) An overview of

the domiciliary care market in the UK; ICF analysis. Output totals may be not sum due to rounding.

5.3 Estimated GVA

The estimated value of GVA in the adult social care sector in Wales is presented in

Table 5.4. The GVA has been calculated using the estimated output in the sector

described above, and turnover to GVA ratios from the ABS for relevant industries.

Applying these ratios to the estimated expenditures provides an estimate of GVA for

the sector of £1.2 billion in 2015/16 in Wales. The residential and nursing care

sectors have the largest estimated GVA (£743 million; 33% and 31% of total GVA

respectively).

Table 5.4 Output estimates of adult social care and related GVA

Total output (£’000) Turnover to GVA ratio GVA (£’000)


Nursing care 448,394 80% 357,304


Day care 88,930 49% 43,226

Other services 300,648 67% 200,342

Direct payments 22,530 49%7 10,951

Total 1,745,390 1,184,262

Source: StatsWales: Adults receiving services by local authority, client category and age group;

LaingBuisson (2017); PSSRU Unit Cost of Health and Social Care (2016); Annual Business Survey;

ICF analysis. Individual row totals may be not sum due to rounding. Totals may not equal the sum of


6 Only including individuals who directly employ Personal Assistants 7 The turnover to GVA ratio is different here to the one used in section 4.3. This is because this estimate is only for individuals who directly employ either Personal Assistants (therefore the turnover to GVA ratio is estimated to be the same as for domiciliary care). In section 4.3, all individuals receiving self-directed funding are included in the Direct Payments line, therefore the turnover to GVA ratio reflects all the care activities they could use their funding for.


Final report 24

Evidence 4 Additional economic benefits of the adult social care sector

In addition to the direct economic value of the adult social care sector, the activities provided also deliver additional benefits and impacts for the wider economy. These additional impacts include:

Health: The provision of high quality adult social care can help to reduce hospital admissions and Accident and Emergency unit attendances among the cared for. It can also help to reduce pressure on the health service by reducing delays for people who are ready to leave hospital. A further benefit of a high quality adult social care sector is that it reduces the stress on unpaid carers. This means that unpaid carers are less likely to need to take absence from their paid employment or have absences from their job (if they are employed) due to the stresses of providing care.

Employment: A high quality adult social care sector can help to support individuals who receive care and unpaid carers remain in employment or (re)-enter the workforce. When an individual receiving care is provided with regular support that meets their needs, both they and any unpaid carers providing them with support can make appropriate arrangements if they want to enter/remain in work. This helps the UK economy by providing a supply of workers who can potentially address skills gaps and Hard to Fill Vacancies in the economy.


Final report 25

6 Indirect and induced effects

6.1 Introduction

The previous sections estimate the direct economic contribution of the adult social

care sector in Wales. This section builds on that analysis to present estimates of

the additional contribution of the adult social care sector to the wider economy

through:

■ Indirect effects - resulting from the purchase of intermediate goods and services by the adult social care sector in delivering its services, which support additional employment and GVA within its supply chain; and

■ Induced effects - resulting from purchases made by those directly and indirectly employed in the adult social care sector, who use their earnings to buy other goods and services.

6.2 Indirect Effects

The adult social care sector purchases a wide range of goods and services from

suppliers in other sectors to support the delivery of adult social care services.

Common examples of purchases made by the adult social care sector will include

cleaning products and services, food and drink, building maintenance services,

utilities, financial services, education and training, furniture and household goods,

medical supplies, transport services and fuel, etc.

These are known as intermediate purchases, and those made by the adult social

care sector will support employment and GVA among supply chain businesses.

Indirect effects are estimated using Type I multipliers (supply linkage effects). The

ONS produces estimates of Type I multipliers, which can be used to estimate the

indirect effects of different products and services on the wider UK economy. As

there are no Welsh specific input-output (I-O) tables, the multipliers for the whole of

the UK have been used.

The latest UK I-O analytical tables8 provide estimates of Type I GVA, output and

employment multipliers. The relevant product group for this study is the Residential

Care and Social Work activities. This product group provides an exact match with

SIC divisions 87 and 88 and therefore covers all adult social care activities as well

as children-related social care activities. It is unlikely that the indirect effects in the

adult social activities differ from those in children’s social care services. Therefore,

it has been assumed that these multipliers are appropriate for estimating the indirect

impacts of adult social care activities.

The I-O tables produce separate output multipliers for social care activities delivered

by:

■ The private sector – the GVA multiplier is 1.32, which suggests that for every £1

of GVA generated by adult social care activities in the private sector, a further

£0.32 of GVA is generated in the rest of the economy. The employment

multiplier is 1.30, which suggests that for every one job in the adult social care

sector, a further 0.30 of a job is provided in the rest of the economy;

8 ONS, Detailed United Kingdom Input-Output Analytical Tables, 2013 (consistent with UK National Accounts Blue Book & UK Balance of Payments Pink Book)


Final report 26

■ The public sector – the GVA multiplier is 1.94, which suggests that for every £1

of GVA generated by public sector activities, a further £0.94 of GVA is generated

in the rest of the economy. The employment multiplier is 1.65, which suggests

that for every one job in the adult social care sector, a further 0.65 of a job is

provided in the rest of the economy; and

■ The non-profit / voluntary sector – the GVA multiplier is 1.56, which suggests

that for every £1 of GVA generated by the voluntary sector, a further £0.56 of

GVA is generated in the rest of the economy. The employment multiplier is 1.37,

which suggests that for every one job in the adult social care sector, a further

0.37 of a job is provided in the rest of the economy.

The Type I multipliers are applied to the estimates of the direct economic

contribution of the adult social care sector in Table 6.1. The table show that indirect

effects of intermediate purchases made by the adult social care sector were

estimated to contribute an additional 31,000 jobs9 and £554 to £583 million of GVA

in Wales.

The additional GVA experienced by supply chain businesses represents 48% the

direct contribution of the sector. Indirect effects are largest in the private sector,

reflecting their relative importance in the sector. The additional jobs generated in

supply chain businesses because of adult social care activities represent 37% of the

total employment in the sector.

Table 6.1 Direct and indirect economic value of the adult social care sector

Income approach


Output approach

GVA

GVA (public sector) (£’000) 245,020 278,105 254,974

GVA (private sector) (£’000) 764,069 811,197 817,141

GVA (voluntary sector) (£’000) 144,460 113,658 112,147

Total GVA (£’000) 1,153,549 1,202,959 1,184,262

Type I multiplier Private: 1.32 Public: 1.94 Voluntary: 1.56

Indirect GVA (public sector) (£’000) 229,248 260,203 238,561

Indirect GVA (private sector) (£’000) 244,084 259,139 261,038

Indirect GVA (voluntary sector) (£’000) 80,406 63,262 62,421

Total indirect GVA (£’000) 553,738 582,604 562,020

Total direct and indirect GVA (£’000) 1,707,287 1,785,563 1,746,283

Employment

Direct employment (public) 16,000

Direct employment (private) 55,700

Direct employment (voluntary) 11,700


Type I multiplier Private: 1.30 Public: 1.65 Voluntary: 1.37

9 These are jobs, not FTEs.


Final report 27

Income approach


Output approach

Indirect employment (public sector) 10,400

Indirect employment (private sector) 16,500

Indirect employment (voluntary sector) 4,300

Total indirect employment 31,200

Total direct and indirect employment 114,600

Source: ICF analysis; Employment values rounded to the nearest 100. Totals may not equal the sum

of services due to rounding.

6.3 Induced Effects10

Induced effects are assessed using Type II multipliers that capture both indirect and

induced effects. The I-O tables provide information which can be used to estimate

the Type II multipliers in the UK. For a detailed description of the method used to

estimate the Type II multipliers, see Annex 1. The relevant Type II multipliers are:

■ the private sector – the GVA multiplier is 1.74 and the employment multiplier is

1.43;

■ the public sector – the GVA multiplier is 2.55 and the employment multiplier is

1.82; and

■ the non-profit / voluntary sector – the GVA multiplier is 2.05 and the employment

multiplier is 1.52.

The Type II multipliers are divided by the Type I multipliers to provide the give

multiplier value (1.32 for GVA, 1.11 for employment). The induced multipliers have

been multiplied by the direct and indirect employment and GVA values to estimate

the induced GVA and employment. The results are presented in Table 6.2.

The results suggest that induced effects (associated with the purchases of goods

and services by individuals directly or indirectly employed by the sector) were

estimated to support a further 12,000 jobs and over £543 million to £567 million of

GVA in the wider economy. The induced GVA effect is similar to the indirect GVA

effect, but considerably smaller than the indirect effect on jobs.

10 ICF believes it can be misleading to attribute all induced effects to the economic contribution of a particular sector at the national level. Indirect effects related to purchases of intermediate goods and services can clearly be attributed to the adult social care sector as they would not take place if the adult social care sector did not exist. The same is not true for induced effects. If the adult social care sector did not exist, it is unlikely that the purchases of goods and services made by the majority of workers in the sector would change significantly. Workers who in the absence of the adult social care sector would be unemployed (and receiving benefits) would provide induced effects (net of the value of state benefit payments). However, many of those directly or indirectly employed by the adult social care sector would be employed in other jobs in other sectors if the adult social care sector did not exist. This is the case for all sectors and industries. Therefore, it can be misleading to represent these induced effects as being attributable to the sector and would cease to exist in the absence of the sector.


Final report 28

Table 6.2 Induced and total economic value of the adult social care sector

Income approach


Output approach

GVA

GVA (public sector) (£’000) 245,020 278,105 254,974

GVA (private sector) (£’000) 764,069 811,197 817,141

GVA (voluntary sector) (£’000) 144,460 113,658 112,147

Total GVA (£’000) 1,153,549 1,202,959 1,184,262

Type II multiplier Private: 1.74 Public: 2.55 Voluntary: 2.05

Induced multiplier 1.32

Induced GVA (public sector) (£’000) 150,710 171,061 156,833

Induced GVA (private sector) (£’000) 320,365 340,125 342,618

Induced GVA (voluntary sector) (£’000) 71,457 56,221 55,473

Total induced GVA (£’000) 542,532 567,406 554,924

Total direct, indirect and induced GVA (£’000) 2,249,820 2,352,970 2,301,207

Employment

Direct employment (public) 16,000

Direct employment (private) 55,700

Direct employment (voluntary) 11,700


Type II multiplier Private: 1.43 Public: 1.82 Voluntary: 1.52

Induced multiplier 1.11

Induced employment (public sector) 2,800

Induced employment (private sector) 7,700

Induced employment (voluntary sector) 1,700

Total induced employment 12,200

Total direct, indirect and induced employment 126,800

Source: ICF analysis; Employment values rounded to the nearest 100. Totals may not equal the sum

of services due to rounding.

6.4 The total economic contribution of adult social care sector in Wales

The adult social care sector is estimated to support a total of 127,000 jobs and £2.2

billion to £2.4 billion of GVA in the Wales. This includes all direct, indirect and

induced effects. The indirect and induced effects are smaller than the direct

economic effects of the adult social care sector. The indirect and induced effects

account for around 95% the direct GVA generated, and around half of total direct

employment (52%).


Final report 29

Public sector providers of adult social care services and their associated

expenditures support 23% of the total jobs and between 28% and 30% of GVA

(including indirect and induced effects). This is despite the public sector

representing 19% of employment and between 21% and 23% of direct GVA. The

differences are due to public sector multiplier effects being higher than for the

private sector.

The overall direct, indirect and induced effects were estimated to represent 3.8% to

3.9% of all GVA and 9% of all jobs in Wales.

Evidence 5 Value of informal care in Wales

This research provides evidence of the economic value of the formal adult social care sector in Wales. However, the work of the sector is supported by unpaid individuals providing informal care to family members or friends. CarersWales have estimated the value of the informal care provided in Wales.

The research uses data from the 2011 Census and population estimates to calculate that over 380,000 individuals were providing nearly 479 million hours of informal care to adults in Wales in 2015. Using an estimate of £17 per hour of care provided, the value of informal care in Wales was estimated to be over £8 billion in 2015 – larger than the value of the formal adult social care sector in Wales.


Final report 30

7 Conclusion This section provides a summary of the key findings of the economic analysis,

including the five key indicators specified in the research aims. The economic

indicators are then compared to other sectors within Wales, so that the size and

scale of the adult social care sector can be identified, and to the other nations of the

UK.

7.1 Summary of findings

The key findings from the research are presented in Table 7.1. This shows that in

2016, it was estimated that there were over 83,000 jobs in the adult social care

sector, and there were nearly 62,000 FTEs. These jobs generated around £1.2

billion in GVA, and the level of productivity (GVA per worker) was estimated to be

£18,700 to £19,500 per FTE.

The indirect effect of the adult social care sector was estimated to be over 31,000

jobs (23,000 FTEs) and between £554 and £583 million in GVA. The indirect effect

is due to the purchase of intermediate goods and services by the adult social care

sector.

The induced effect of the adult social care sector (additional spending by those

directly and indirectly employed through the adult social care sector) was estimated

to be over 12,000 jobs (9,000 FTEs) and between £543 million and £567 million of

GVA.

The total direct, indirect and induced value of the adult social care sector in Wales

was estimated to be nearly 127,000 jobs, nearly 94,000 FTEs and £2.2 billion to

£2.4 billion in GVA.


Final report 31

Table 7.1 Summary of findings

Income approach


Output approach


Total FTE employment 61,600

Total direct GVA (£’000) 1,153,549 1,202,959 1,184,262

Estimated productivity per person 13,800 14,400 14,200

Estimated productivity per FTE 18,700 19,500 19,200

Indirect employment (jobs) 31,200

Indirect employment (FTE) 23,000

Induced employment (jobs) 12,200

Induced employment (FTE) 9,000

Total employment as a result of adult social care activity (jobs) 126,800

Total employment as a result of adult social care activity (FTE) 93,600

Indirect GVA (£’000) 553,738 582,604 562,020

Induced GVA (£’000) 542,532 567,406 554,924

Total GVA as a result of adult social care activity (£’000) 2,249,820 2,352,970 2,301,207

Source: ICF analysis; Employment and productivity values rounded to the nearest 100. Totals may not equal the sum of services due to rounding.

7.2 Benchmarking

The Annual Population Survey (APS) provides estimates of the number of

individuals working in each broad sector in Wales. This allows the scale of

employment in the adult social care sector to be compared to other sectors.

Figure 7.1 presents the employment by sector analysis, combining the findings from

this research with data from the APS. This shows that the adult social care sector

employs more workers than the transport and storage, administrative and support

services and professional, scientific and technical sectors. Direct employment in

adult social care represents 6% of total employment in Wales. This shows that adult

social care is an important sector in terms of current employment in Wales.


Final report 32

Figure 7.1 Employment by sector in Wales (sectors with highest employment),

2016

Source: Annual Population Survey; ICF analysis. Employment rounded to nearest 100. Human health and social work activities excluded from analysis

The estimated value of GVA by industry in Wales is presented in the Regional Gross

Value Added statistical series. This presents GVA by broad industrial group. The

total value of GVA in Wales in 2016 was estimated to be nearly £60 billion. Direct

GVA from the adult social care sector (£1.2 billion) is estimated represent 2% of

total Welsh GVA.

Figure 7.2 presents GVA estimates by sector, for a selection of economic sectors.

This shows that adult social care generates lower values of GVA than the sectors

with similar levels of employment (for example transport and storage and

accommodation and food service). However, it still generates a significant

proportion of Welsh GVA, and the value of GVA in the sector can be expected to

rise in the future as demand for adult social care services grows.


Final report 33

Figure 7.2 GVA by broad sector (selected sectors), £millions, 2016

Source: Regional GVA statistical series; ICF analysis. Human health and social work activities excluded from analysis

The estimated value of productivity (GVA per FTE) in Wales has been estimated

using data from the ONS Labour Productivity data series. The estimated value of

productivity in Wales was £53,000. Productivity in the adult social care sector was

estimated to be between 35% and 37% of the average productivity in Wales. The

estimated level of productivity in the adult social care sector in Wales was lower

than any specified sector in the Labour Productivity data series.

7.3 National comparisons

This research involved estimating the value of the adult social care sector in all the

nations of the UK. The key findings from all nations are summarised in Table 7.2.

This shows that the total value of adult social care sector in Wales is lower than in

England and Scotland, but higher than in Northern Ireland in absolute terms. This is

expected given the population of Wales. The estimates show that:

■ The level of productivity in the workforce is lower in Wales than in England and

Scotland, but comparable to Northern Ireland;

■ The estimated GVA per capita in Wales is similar to England, higher than

Northern Ireland but lower than Scotland; and

■ The estimated values from the income approach are lower than the estimates for

the expenditure and output approaches in all nations.

■ The value of adult social care GVA is broadly comparable across all the nations

of the UK. Scotland has the highest values of GVA per capita in each approach.

Some of the reasons behind the differences in GVA per capita in each nation are:

■ In the income approach, earnings are higher in Scotland than the other UK

nations. One reason for this is the introduction of the living wage in the adult

social care sector in Scotland. Despite the higher earnings, there are a

comparable number of FTEs (per capita) in Scotland and the other UK nations.


Final report 34

■ In Northern Ireland, the estimated number of jobs and FTEs in the adult social

care sector does not cover non-regulated services or PAs, and the earnings from

these jobs (and subsequent GVA) are not estimated. This helps to explain why

the estimate of GVA per capita using the income approach is lower in Northern

Ireland than in the other nations, and why the productivity values for Northern

Ireland are much higher than in the income estimate.

■ The amount of public spending per capita on adult social care is higher in

Scotland than in the other nations. There are also a comparable number of

FTEs (per capita) in Scotland and the other UK nations. The higher level of

public expenditure and higher average wages in the adult social care sector in

Scotland helps to explain why the estimated value of GVA per capita is higher in

Scotland.


Final report 35

Table 7.2 Comparison of the value of the adult social care sector across the UK

England Northern Ireland Scotland Wales UK

Direct economic value

Income approach (£’000) 20,277,218 544,333 2,278,427 1,153,549 24,253,526

Expenditure approach (£’000) 20,420,586 605,163 2,558,174 1,202,959 24,786,883

Output approach (£’000) 21,651,931 550,653 2,511,150 1,184,262 25,897,996

Jobs 1,488,000 38,500 147,800 83,400 1,756,100

FTE jobs 1,027,900 28,900 109,600 61,600 1,228,000

Productivity per FTE

Income approach (£) 19,700 18,800 20,800 18,700 19,700

Expenditure approach (£) 19,900 20,900 23,300 19,500 20,200

Output approach (£) 21,100 19,100 22,900 19,200 21,100

GVA per capita

Income approach (£) 370 290 420 370 370

Expenditure approach (£) 370 320 470 390 380

Output approach (£) 390 300 460 380 390

GVA per capita 65+

Income approach (£) 2,050 1,830 2,280 1,820 2,050

Expenditure approach (£) 2,070 2,030 2,560 1,900 2,100

Output approach (£) 2,190 1,850 2,510 1,870 2,190

ICF analysis


Final report 36

Part A: ANNEXES


Final report 37

Annex 1 Methodology This annex presents more details about the assumptions and calculations used to estimate

the size, structure and economic value of the adult social care sector in Wales. It aims to

provide more technical detail about the methodology used to establish the estimates.

A1.1 Introduction to the three approaches to measure GVA

The economic value of the sector has been calculated using three different approaches: the

input approach; the expenditure approach; and the output approach. This was to increase

the robustness of the estimates, as there were strengths and weaknesses with the

availability and quality of the data required for each of approach. A brief overview of the

methodologies is presented here.

The income approach to measuring GVA attempts to measure the total income generated by

the sector. There are two main components of income: the earnings / wages generated by

workers in the sector; and additional income generated by the sector. The approaches to

measuring these two components of income are:

■ Earnings / wages. The number of jobs and FTEs in different adult social care services

and in different types of provider was estimated. This was then multiplied by the

estimated average earnings for a FTE for each type of service / provider. This gave an

estimate of the total earnings in the sector.

■ GOS. The other income generated by the sector has been estimated using the GOS.

The GOS is income minus operating costs (for example the income received for providing

an hour of domiciliary care minus staff, transport and material costs). It is not the profit in

the sector, as it does not include costs such as rent, interest payments, the depreciation

of capital goods and exceptional purchases. Therefore, it is possible for a provider to

generate a GOS and still make an economic loss. The average EDITBAR value for

the care home sector (CMA, 2017) and the average value of surplus for the domiciliary

care sector in the UK (UKCHA, 2018) have been multiplied by the total value of output for

these services to estimate the GOS.

■ These two types of income were summed together to estimate the GVA in the adult social

care sector.

The expenditure approach to measuring GVA involves estimating the total level of

expenditure on adult social care (public and private funding). The level of expenditure is

used as a measure of spending in the sector, which is the equivalent of business turnover

(value of goods and services sold). This is then converted to GVA on the basis of turnover to

GVA ratios provided in the Annual Business Survey (ABS). This represents the removing of

intermediate purchases. The expenditure approach for the adult social care sector requires

estimates of two types of expenditure:

■ Public and co-financing expenditure – the level of expenditure by the state. Data for this

was collected from national statistics; and

■ Self-funding. This is more difficult to estimate as there is no data available that shows the

number of self-funders. The number of self-funders was estimated using findings from a

rapid evidence review. The number of self-funders was multiplied by an average cost for

self-funders and their demand for services (the number of hours of adult social care they

needed) to estimate the total value of self-funded expenditure.

■ These two types of expenditure were summed together to estimate the GVA in the adult

social care sector. The total expenditure was then converted to GVA by multiplying the

expenditure by the turnover to GVA ratios.


Final report 38

The output approach to measuring GVA involves multiplying the number of hours of adult

social care that was provided by the average cost of adult social care. This provides an

estimate of spending in the sector, which is the equivalent of business turnover (value of

goods and services sold). This is then converted to GVA on the basis of turnover to GVA

ratios provided in the Annual Business Survey (ABS). This represents the removing of

intermediate purchases. The expenditure approach for the adult social care sector involved

three main steps estimates:

■ Identifying the hours of adult social care provided. For the care homes sector, this was

estimated using capacity and average occupancy information for care homes. For the

non-residential sector, the number of service users receiving non-residential care was

collected and this was multiplied by the average number of hours a service user needs

the service.

■ The number of hours used of each service is multiplied by the average cost of the service

to estimate the total value of the services used (business turnover).

■ The total value of output was then converted to GVA by multiplying the expenditure by

the turnover to GVA ratios.

A1.2 The size and structure of the adult social care sector in Wales

A1.2.1 Number of adult social care sites

The number of sites providing regulated adult social care services in Wales has been taken

directly from the CIW database and Annual Report (2016). The database included sites

which provided social care which fell outside the adult social care footprint. The services in

the database were categorised by service provided, so non-adult social care sites were

filtered out. This provided the estimates of the number of provider sites in the regulated adult

social sector.

No data was collected on the number of sites providing non-regulated adult social care.

Non-regulated activities could include community care, advice and guidance, befriending

services, non-personal care, residential care for homeless individuals and women’s refuges.

To estimate the number of sites providing non-regulated adult social care in Wales, data from

the IDBR, CIW and SfC in England was used.

The approach used data from the IDBR, CIW data and SfC in England:

■ Data was taken from the IDBR which showed the total number of local sites in the

relevant Standard Industrial Classification (SIC) code classes in Wales.

■ Information from SfC was used to estimate the proportion of these local sites which were

providing adult social care (as the SIC code class includes providers of other caring and

charitable services, such as children’s services). This was multiplied by the number of

local sites in the IDBR for Wales to provide an estimate of the total number of adult social

care sites. This was used as an estimated number of adult social care sites in Wales.

■ The number of regulated adult social care sites (taken from the CIW) was subtracted from

the total number of adult social care sites. This provided an estimate of the number of

non-regulated adult social care sites in Wales

This information is summarised in Table A1.1.


Final report 39

Table A1.1 Number of non-regulated local sites

Residential care (SIC 87)

Non-residential (SIC 88)

Total

IDBR 1,750 2,240 3,980

Proportion assumed to be adult social care 77% 32%

Estimated number of adult social care sites in IDBR 1,350 710 2,060

Estimated number of regulated adult social care sites in CIW database11 1,090 490 1,580

Estimated number of non-regulated adult social care sites 260 220 480

Source: IDBR; CIW regulated services database; SfC data; ICF calculations; Numbers rounded to the nearest 10

A1.2.2 The size and structure of the adult social care workforce

The number of public sector workers in the adult social care sector in Wales is collected by

the Welsh Government, and is publicly available. This data differentiates staff by the type of

service they provide. The data also provides the number of FTE staff in each type of service.

These were used directly in the analysis of the size of the adult social care workforce.

The Welsh Government data also included estimates of the number of staff working in

children’s social care, and the number of management / administration / support staff. Some

of these ancillary staff work in the adult social care sector. It is essential to capture these

staff, as the research aims to describe the adult social care sector, not just individuals

providing adult social care.

The management / administration / support staff in the public sector adult social care sector

was calculated by estimating the proportion of total social care time that was for adult social

care (65%), and multiplying this by the total number of ancillary staff.

The number of staff working in the independent sector was provided by Social Care Wales,

using information from Data Cymru (SCWDP workforce data collection report, 2015-16).

This provided the total number of staff working in the sector, but not the number of FTE jobs.

The data from the report was used to estimate the number of voluntary sector and private

sector jobs. The data shows the number of services disaggregated by voluntary / private

sector providers, and this ratio has been applied to the number of jobs to estimate the

voluntary / private sector workforce.

To estimate the number of FTEs in the private and voluntary sectors, the proportion of staff

who worked full-time and part-time in the independent regulated sector in Wales was taken

from the SCWDP workforce data collection report (52% worked full-time). Full-time workers

were assumed to work 37 hours per week; part-time workers were assumed to work 18.5

hours per week. This gave an estimate of an average of 28 hours worked per week, or 0.76

FTE jobs per job.

The above describes the workforce in regulated adult social care activities and the public

sector in Wales. The non-regulated workforce (those not subject to CIW inspections) has

been estimated using the number of non-regulated sites (see Table A1.1). The number of

jobs per non-regulated site in England (based on SfC data) has been multiplied by the

number of non-regulated sites in Wales (see Table A1.2). The distribution of jobs across

11 Excluding services relating to the care of children.


Final report 40

different types of adult social car provision is based on the distribution of non-regulated jobs

in England, calculated using SfC data (see Table A1.3).

Table A1.2 Estimated number of non-regulated employees

Residential care Non-residential

Total

Estimated number of non-regulated adult social care sites 260 220 480

Estimated number of jobs per site 16.5 14.9

Estimated number of non-regulated jobs 4,300 3,300 7,500

Source: IDBR; CIW, (2016) Chief Inspectors Annual Report, 2015-16; CIW regulated services database; SfC

data; ICF calculations; Numbers rounded to the nearest 10.

Table A1.3 Estimated distribution of non-regulated sites and jobs

Sub-sector Number of sites Number of jobs %

Residential 260 4,300 100% (of residential)

Domiciliary 40 600 18% of social work

Day care 60 900 27% of social work

Other 120 1,900 55% of social work

Total 480 7,700

Source: IDBR; CIW, (2016) Chief Inspectors Annual Report, 2015-16; CIW regulated services database; SfC

data; ICF calculations; Number of sites rounded to the nearest 10; Number of jobs rounded to the nearest 100.

Totals may not equal the sum of services due to rounding.

A1.3 The income approach to economic value

A1.3.1 Earnings

The earnings information provided in ASHE, according to adult social care experts,

overestimated the earnings in the sector in all UK nations.12 No other information is collected

in Wales which presents earnings in the adult social care sector. Therefore, the value of

earnings in Wales was estimated using SfC estimates of earnings in England and information

from ASHE showing the relative value of earnings in Wales and England.13

The value of hourly earnings14 in the adult social care sector in Wales was divided by the

average hourly earnings in the sector in England to establish the ratio of earnings between

the two countries. The ratio was then multiplied by the values collected by SfC.

Table A1.4 shows the estimated earnings in Wales in 2016 by sector. The earnings are

separated by type of service and type of provider (public and private / voluntary sectors).

12 ASHE estimates do not include self-employed workers, or jobs in businesses which are not required to be PAYE registered (most likely small firms with low levels of pay). Therefore the ASHE estimates exclude many low paying jobs, which can lead to an overestimation of earnings. 13 Data was collected from both ASHE and the LFS on earnings in the adult social care sector, based on appropriate SIC codes. The ratios between earnings in each nation was similar in both ASHE and the LFS. ASHE data was selected as the values are based on a larger sample. 14 Hourly earnings were selected as the number of responses for hourly earnings was larger and it does not include any other potential differences in hours worked or employee benefits.


Final report 41

These values have been used to estimate the total value of earnings by multiplying the

earnings by the number of FTE jobs in the adult social care sector.

Table A1.4 Estimated earnings in Wales 2016

Sector Earnings in England (FTE) ASHE ratio Earnings in Wales

Public sector

Residential care £19,500 99% £19,400

Nursing care £18,900 99% £18,800

Domiciliary care £20,400 89% £18,100

Day care £20,700 89% £18,300

Other £29,600 89% £26,300

Private / voluntary sector

Residential care £15,900 99% £15,800

Nursing care £16,900 99% £16,800

Domiciliary care £16,200 89% £14,400

Day care £18,100 89% £16,100

Other £19,000 89% £16,900

Personal Assistants £19,500 89% £15,600

Source: SfC data; ASHE; ICF calculations; Values rounded to the nearest 100. Individual row totals may be not

sum due to rounding.

A1.3.2 Gross Operating Surplus

GOS is defined as income minus operating costs (for example the income received for

providing an hour of domiciliary care minus staff, transport and material costs). In estimating

GOS, it is assumed that only private sector care providers are run ‘for profit’, and therefore

generate a GOS.

It is important to note that the GOS does not equal the profit taken by owners and

shareholders. Only a subset of total costs are included in the GOS calculation. Long term

costs such as the use of fixed capital (depreciation and amortisation), exceptional purchases,

the payment of interest and taxation and rents are not removed. It is the equivalent of

earnings before interest, taxes, depreciation, amortization and restructuring or rent costs

(EBITDAR).15

The Competition and Markets Authority (CMA, 2017) provides a more detailed assessment

of GOS in the residential care sector. This examined the annual accounts of all residential

care operators in the UK that are required to file their accounts at Companies House. This

found that in 2015/16 (the most recent year that comprehensive information was available),

the GOS in the sector was around 16%. The 16% has been used in the analysis. It should

be noted that this is a simplifying assumption for the calculation, rather than conducting

primary research (examining all adult social care providers annual accounts) to estimate the

level of GOS. 16% has been multiplied by the output of the residential and nursing care

sectors.

The GOS for domiciliary care providers has been estimated using information taken from the

United Kingdom Homecare Association (UKHCA, 2017). This research provided information

15 The EBITDAR value has been used in the analysis as it is the preferred measure in both the LaingBuisson report and the CMA market analysis. The EBITDA measure, where rents and restructuring costs are assumed to be operating costs is used in the sensitivity analysis in Annex 2


Final report 42

which was used to estimate an equivalent of the EBITDAR value to represent GOS. It was

estimated that the GOS margin in the home care market was 11.3% for private domiciliary

providers and 8.3% for voluntary providers. The estimation of GOS included the following

cost indicators to calculate the GOS (attempting to be the equivalent of EBITDAR):

■ Care worker costs;

■ Staffing, recruitment and training;

■ Consumables; and

■ Professional costs.

The cost indicators which were excluded from the estimation of the GOS in the domiciliary

care were:

■ Net profit / surplus (3%) – included for the estimation of GOS in the private sector, but

assumed to be zero in the estimation of GOS in the voluntary sector;

■ Premises, utilities and services (5.8%); and

■ Other business overheads (3%)..

There is no information available for the value of GOS for day care and other services.

Therefore, no attempt has been made to estimate the GOS in these services. Finally, it has

been assumed that there is no GOS in the employment of PAs – it is assumed that they are

directly employed and there is no additional income above their pay.

A1.3.3 Direct employers

The estimation of the number of direct employers and the number of PAs they employ is

based on Welsh Government data and SfC research. The Welsh Government provide

publicly available statistics which show the number of individuals receiving direct payments.

SfC estimate that just under one third of individuals receiving direct payments employ their

own staff (29%). Each individual employing staff employs an average 2.1 workers.

On average, each PA works 17 hours per week (0.46 FTEs). A PA in England has estimated

earnings of £17,500 (FTE). The calculation as described in section A1.3.1 has been used to

estimate the earnings in Wales (multiplying the English earnings by 89%), which were

£15,600.

The number of FTEs is multiplied by the average earnings per FTE to estimate the value of

direct employment in Wales.

A1.4 The expenditure approach to economic value

Data which presents the value of public sector spending and co-funding in the adult social

care sector is published by the Welsh Government. The data is disaggregated by type of

user and type of service.

However, this data does not cover the expenditure by self-funders. There is no data which

provides statistics on the number of self-funders or the value of their expenditure. Therefore,

information was taken from existing literature to estimate the number and value of self-

funding in Wales.

LaingBuisson (2017) estimate the proportion of individuals in residential care who are self-

funders. In Wales, 31% of residents are estimated to be self-funders. The report also

produces estimates of the total capacity of the sector and occupancy rates. Using these

figures, it was possible to estimate the number of self-funders (see Table A1.5).

The Welsh Government produce statistics which show the number of people receiving

funding for domiciliary care, day cases and other social care services. However, again there

are no statistics available to show the number of individuals who fund their own care. An


Final report 43

evidence review was conducted to find evidence of the number of people who fund their own

non-residential social care. This found a wide range of estimates, including:

■ 20% of individuals receiving homecare in the UK fund their own homecare;16

■ 21% of individuals receiving homecare;17

■ Between 20% and 25% of individuals receiving homecare, based on studies between

2004 and 2011;18

■ 30% of individuals receiving homecare in England;19 and

■ 35% of expenditure on home care in England.20

These were used to help to estimate the number of individuals who self-fund their care. In

the analysis in the main report, it has been assumed that 21% of individuals self-fund their

domiciliary and day care in Wales. This is based on the analysis that 30% of individuals in

England self-fund their non-residential care – however, in England 43% of individuals self-

fund their residential care (compared to 31% in Wales). Adjusting the 30% figure in line with

this leads to an estimate that 21% of individuals in Wales self-fund their non-residential care.

For other services, it is not possible to disentangle the number of individuals who pay for

their own care, due to the diverse nature of services and prices for services. Therefore, it

has been assumed that 21% of the total output for other services in Wales is self-funded.

Table A1.5 Estimates of the number of self-funders, Wales

Type of provision Total number of individuals receiving support

Proportion of individuals who are self-funders

Number of self-funders


Residential care with nursing

11,100 51% 3,500


Day cases 10,100 22% 2,200

Source: LaingBuisson (2017) Care of Older People; Welsh Government; ICF calculations; Values rounded to the nearest 10. Individual row totals may be not sum due to rounding

The usage of services by self-funders is assumed to be the same as the usage of services

by funded individuals. This means that:

■ Residential care users require 52 weeks of care per year;

■ Domiciliary care users require five hours of care per week (260 hours per year); and

■ Day care users require 2.5 sessions of day care per week (130 sessions per year).

The unit cost for self-funders is assumed to be higher than for those for funded individuals.

Previous research estimated that this mark-up was 20%, but the more recent studies by the

CMA (2017) and LaingBuisson (2017) estimates that the mark-up is over 40%. The 46%

estimated mark-up in LaingBuisson (2017) has been used to estimate the unit cost for self-

funders in residential care. A 20% mark-up has been used for domiciliary care. These mark-

ups have been added to the value of funded care. The estimated unit costs of social care for

self-funders in Wales is presented in Table A1.6.

16 HM Government (2012) Caring for our future: reforming care and support; Institute of Public Care, Oxford Brookes (2015) Understanding the self-funding market in social care A toolkit for commissioners 17 UK Care Homes Association (2016) An overview of the Domiciliary Care Market in the UK 18 National Institute for Health research (2014) People who fund their own social care 19 Personal Social Services Research Unit (2015) Projections of Demand for and Costs of Social Care for Older People and Younger Adults, 2015 to 2035 20 LaingBuisson (2017) Care of Older People


Final report 44

The number of self-funders was multiplied by the unit cost of care for self-funders and the

volume of care they require. This gives the total value of the self-funded market in Wales.

This was then added to the value of public and co-funded expenditure to estimate the total

expenditure in the adult social care sector.

Table A1.6 Unit costs for care in Wales

Unit cost for funded individuals

Unit cost for self-funders

Residential care £490 / week £710 / week

Residential care with nursing £580 / week £810 / week

Domiciliary care £22 / hour £26 / hour

Day cases £65 / session £78 / session

PSSRU, Unit Cost of Health and Social Care, 2016; LaingBuisson; ICF calculations; Cost of residential care rounded to the nearest £10.

A1.5 The output approach economic value

The output approach to estimating the economic value of adult social care multiplies the

quantity of services used by individuals in Wales by the unit cost of each type of provision.

The number of individuals using each type of service is presented in Table 5.1, Table 5.2 and

Table 5.3 in the main report. This includes individuals who receive funding for their care and

individuals who self-fund their care. The unit costs used in the calculations are taken from

the PSSRU (2016) report. The cost of adult social care in Wales (taken from LaingBuisson,

2017) was divided by the costs in England, to establish the ratio of earnings between the two

countries. The ratio was then multiplied by the unit costs from the PSSRU research to

estimate the costs in Wales.

A1.6 Indirect and induced effects

In order to attribute output / expenditure to public sector providers, workforce and care home

capacity data was used. The UK I-O tables produce estimates of Type I multiplier effects,

and provide data which allows the Type II multipliers and induced effects to be calculated.

The method used is described below:

■ The Blue Book suggests a marginal propensity to consume of 70.5% (estimated as

household consumption as a percentage of total income), which has been used in these

calculations.

■ The marginal propensity to consume was applied to the total direct and indirect

income/GVA for the care sector from the UK I-O tables, to estimate the spending of

wages of those directly and indirectly employed by the care sector.

■ The UK I-O tables include household consumption by sector and this was used to

disaggregate the re-spent wages by sector.

■ Metrics were calculated to estimate the GVA and employment supported by this

household expenditure in each of the 127 sectors included in the UK I-O tables. This

used data from the ABS, which enables metrics to be produced for sectors at a

disaggregated level. These can then be mapped onto the UK I-O tables.

■ The final step was to sum the GVA and employment supported in each sector from the

household spending of wages received, and this was then used to produce estimates of

induced multipliers for the spending of wages earned in the care sector.


Final report 45

In order to estimate the indirect and induced effect disaggregated by sector, the output /

expenditure generated by public, private and voluntary sector providers needed to be

calculated. This has been done using information about the output of public, private and

voluntary sector providers in the residential and nursing care sectors, and the percentage of

total employment which is public / private / voluntary sector from the workforce data.


Final report 46

Annex 2 Sensitivity analysis This annex provides a sensitivity analysis of the estimates of the size, structure and

economic value of the adult social care sector in Wales. Some of the calculations used to

estimate the size, structure and economic value of the sector involve assumptions and data

manipulation. In the sensitivity analysis, some of these assumptions are varied, to show how

sensitive the overall results are to these assumptions. The sensitivity analysis presents a

range of values (a high and a low estimate) of the value of the adult social care sector in

Wales.

The sections below show the assumptions which have been varied, and the values used in

the calculations. Other than these changes, the calculations undertaken are exactly as set

out in the main report and Annex 1. The final results of the sensitivity analysis (Employment,

expenditure / output and GVA) are presented, but the intermediary tables (included in the

main report) are not recreated.

A2.1 The size and structure of the adult social care sector in Wales

The assumptions around the number of unregulated sites providing adult social care and the

number of jobs at each unregulated site has been varied in the sensitivity analysis. The

varied assumptions are presented in Table A2.1.

The results of the varied assumptions are presented in Table A2.2. This shows that despite

varying the assumptions, the estimated number of sites providing adult social care does not

alter significantly. This is because the majority of sites providing adult social care are

regulated.

The number of FTE jobs in the sector also varies. Again, the difference in total employment

is negligible (a difference of 2,400 between the highest and lowest estimate, or 4% of the low

estimate). Again, this is because the large majority of the workforce is in the regulated

sector.

Table A2.1 Assumptions varied in the sensitivity analysis of the size and structure of

the adult social care sector

Low Central High Calculation

Number of unregulated sites providing adult social care

460 480 530 +/- 5%, to reflect uncertainty

Number of jobs per unregulated site – residential care

14.9 16.5 18.2 +/- 5%, to reflect uncertainty

Number of jobs per unregulated site – social work

13.4 14.9 16.4 +/- 5%, to reflect uncertainty

Table A2.2 Results of the sensitivity analysis of the size and structure of the adult

social care sector in Wales

Low Central High


Final report 47

Low Central High

Sites

Residential care 510 530 540

Nursing care 820 820 820

Domiciliary care 520 520 520

Day care 60 60 60

Other services 120 130 130

Total sites 2,030 2,060 2,080

Jobs (FTE)


Nursing care 5,500 5,500 5,500


Day care 6,800 6,900 7,000

Other services 11,800 12,100 12,200

Total 59,100 60,000 60,800

A2.2 The income approach to economic value

Table A2.3 presents the assumptions which have been varied for the income approach

estimates. These include the number of jobs in the sector, the average estimated earnings

and the level of profit generated by the sector. These have been varied as they all include

assumptions and calculations, rather than being taken directly from data sources.

Table A2.3 Assumptions varied in the sensitivity analysis of the income approach

Low Central High Calculation National Living Wage

Number of jobs See Table A2.2

Average earnings – public sector +/- 5% to reflect uncertainty

Residential care (£) 18,500 19,400 20,400 20,400

Nursing care (£) 17,900 18,800 19,700 19,700

Domiciliary care (£) 17,200 18,100 19,000 19,000

Day care (£) 17,400 18,300 19,300 19,300

Other services (£) 25,000 26,300 27,600 27,600

Average earnings – independent sector

Residential care (£) 15,000 15,800 16,600 17,700

Nursing care (£) 15,900 16,800 17,600 17,700

Domiciliary care (£) 14,400 14,400 15,100 17,700

Day care (£) 15,300 16,100 16,900 17,700

Other services (£) 16,000 16,900 17,700 17,700

Personal Assistants 14,800 15,400 16,400 17,700

GOS – residential care 7.5% 16% 19.5% EBITDA; EBITDAR (CMA; EBITDAR LB)

16%

GOS – private 8.3% 11.3% 15.3% UKHCA report 11.3%


Final report 48

Low Central High Calculation National Living Wage

domiciliary care

GOS – voluntary domiciliary care

6.3% 8.3% 10.3% UKHCA report 8.3%

The results of the sensitivity analysis are presented in Table A2.4. This shows that when the

assumptions for the calculations are varied, the total value of GVA generated in the adult

social care sector varies by £222 million. This represents 21% of the low estimate of the

adult social care sector. The largest differences are seen in the residential and nursing care

sectors, as more elements of GVA have been altered (earnings, jobs and GOS).

Table A2.4 Results of the sensitivity analysis of the income approach

GVA estimate Low (£’000) Central (£’000) High (£’000) National Living Wage (£’000)

Residential care 289,534 328,012 359,587 360,636

Nursing care 113,861 150,317 170,788 155,308

Domiciliary care 275,350 292,266 321,522 341,434

Day care 107,330 114,643 122,084 124,298

Other services 226,082 242,761 257,141 254,457

Direct payments 24,272 25,549 26,827 28,979

Total 1,036,429 1,153,549 1,257,950 1,265,112


A2.3 The expenditure approach to economic value

The assumptions which have been varied for the sensitivity analysis of the expenditure

approach to measuring the value of the sector are presented in Table A2.5. Where data was

taken directly from official statistics and did not require further estimation or manipulation, no

sensitivity analysis has been undertaken. Therefore, the only areas where sensitivity

analysis has been conducted is for self-funders – the proportion of service users who self-

fund, and the unit cost for self-funded care.

Table A2.5 Assumptions varied in the sensitivity analysis of the expenditure approach


Proportion of individuals who are self-funders +/- 5% to reflect uncertainty; Assumed 25% of non-residential care services in England are self-funders (low); 32% are self-funders (high). This is then adjusted to Welsh self-funders using the ratio of England to Wales self-funders in residential care.

Residential care 29.8% 31.4% 33.0%

Nursing care 29.8% 31.4% 33.0%

Domiciliary care 17.2% 21.7% 24.3%

Day care 17.2% 21.7% 24.3%

Proportion of ‘other services’ which are self-funded

17.2% 21.7% 24.3%


Final report 49


Unit cost of self-funded care +/- 5% to reflect uncertainty Residential care £640 / week £710 / week £780 / week

Nursing care £730 / week £810 / week £900 / week

Domiciliary care £23 / hour £26 / hour £28 / hour

Day care £70 / session £78 / session £86 / session

The results from the sensitivity analysis are presented in Table A2.6. This shows a range in

the estimates of £101 million due to the changes in the assumptions. This represents 9% of

the low estimate of total GVA of the adult social care sector.

Table A2.6 Results of the sensitivity analysis of the expenditure approach

GVA estimate Low (£’000) Central (£’000) High (£’000)


Nursing care 193,146 210,656 229,772


Day care 65,343 68,841 71,896

Other services 192,926 200,342 204,613

Direct payments 41,272 41,272 41,272

Total 1,149,376 1,202,959 1,250,243


A2.4 The output approach economic value

As with the sensitivity analysis for the expenditure approach, the only values that have been

altered are those which required estimation and data manipulation. For the output approach,

this meant the unit cost of adult social care and the number of care users. The values used

in the sensitivity analysis are presented in Table A2.7.

Table A2.7 Assumptions varied in the sensitivity analysis of the output approach


Unit cost of adult social care +/- 5% to reflect uncertainty Residential care –

public provision £920 / week £970 / week £1,020 / week


Final report 50


Residential care – private provision

£540 / week £570 / week £600 / week

Nursing care £650 / week £680 / week £710 / week

Domiciliary care £22 / hour £23 / hour £24 / hour

Day care £63 / session £67 / session £72 / session

Residential care for younger adults

£940 / week £990 / week £1,040 / week

Direct payment recipients

£14 / hour £15 / hour £16 / hour

Number of self-funded care users

See Table A2.5

The results of the sensitivity analysis are presented in Table A2.8. This shows that by

varying the assumptions for the unit cost of care and the number of individuals who self-fund

their care, the results for the value of adult social care varies from £1.1 billion to £1.3 billion.

This represents a £108 million difference between the high and low estimates, or 10% of the

low value of the sector.

Table A2.8 Results of the sensitivity analysis of the output approach

GVA estimate Low (£’000) Central (£’000) High (£’000)

Residential care 365,166 386,037 404,932,692

Nursing care 340,592 357,304 354,039,302

Domiciliary care 170,441 186,402 202,846,689

Day care 38,160 43,226 47,702,212

Other services 192,926 200,342 204,613,273

Direct payments 10,221 10,951 11,681,427

Total 1,117,506 1,184,262 1,225,816



Final report 51

Annex 3 Bibliography

■ BUPA (2011) A Fair Deal – Ensuring Local Authority Fee Levels Reflect the Real Costs of

Caring for Vulnerable Older People,

■ CarersUK (2015) Valuing Carers 2015

■ Competition and Markets Authority (2017) Care Homes Market Study

■ Data Cymru (2016) SCWDP workforce data collection 2016

■ HM Government (2012) Caring for our future: reforming care and support;

■ Institute of Public Care, Oxford Brookes (2015) Understanding the self-funding market in

social care A toolkit for commissioners

■ IPC (2011) How to commission the adult social care workforce: A practical guide for

commissioners

■ LaingBuisson (2017) Care of Older People

■ LaingBuisson and Joseph Rowntree Foundation (2008) Calculating a Fair Price for Care

■ National Institute for Health research (2014) People who fund their own social care

■ OPM (2013) Older people who self-fund their social care: A guide for health and

wellbeing boards and commissioners

■ Personal Social Services Research Unit (2015) Projections of Demand for and Costs of

Social Care for Older People and Younger Adults, 2015 to 2035

■ Personal Social Services Research Unit (2016) The unit cost of health and social care

■ Skills for Care (2016) The Size and Structure of the Adult Social Care sector, 2016

■ Skills for Care (2017) ‘Individual employers and Personal Assistants’

■ United Kingdom Homecare Association (2016) An overview of the Domiciliary Care

Market in the UK

■ UK Commission for Employment and Skills (2016) Working Futures

■ United Kingdom Homecare Association (2018) A Minimum Price for Homecare

■ University of East Anglia (2010) Buyer Power and Price Discrimination: The Case of the

UK Care Homes Market


Final report 52

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